question archive Taylor Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system
Taylor Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system
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Taylor Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. The company’s records under this system reveal the following inventory layers at the beginning of 2021 (listed in chronological order of acquisition):
| 18,000 units @ $10 | $ | 180,000 | |||||
| 23,000 units @ $15 | 345,000 | ||||||
| Beginning inventory | $ | 525,000 | |||||
During 2021, 46,000 units were purchased for $20 per unit. Due to unexpected demand for the company's product, 2021 sales totaled 56,000 units at various prices, leaving 31,000 units in ending inventory.
Required:
1. Calculate the amount to report for cost of goods sold for 2021.
2. Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2021 financial statements. Assume an income tax rate of 25%.
3. If the company decided to purchase an additional 10,000 units at $20 per unit at the end of the year, how much income tax currently payable would be saved?
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