Multiple Choice Question 87 Sheffield Company\'s inventory records show the foll

Question

Multiple Choice Question 87 Sheffield Company's inventory records show the following data: Units Unit Cost 9800 $9.00 9200 6300 Inventory, January 1 Purchases: June 18 7.00 November 8 6.00 A physical inventory on December 31 shows 3500 units o an effective tax rate of 22%. Sheffield uses the periodic invent than FIFO is used? n hand. Sheffield sells the units for $13 each. The company has ory method. What is the difference in taxes if LIFO rather $1542 tax savings $2310 additional taxes $1542 additional taxes $1336 additional taxes

Explanation / Answer

Cost of goods sold under FIFO = 9800*9+9200*7+2800*6 = $    1,69,400 Cost of goods sold under LIFO = 6300*9+9200*7+6300*6 = $    1,58,900 Lower cost under LIFO $        10,500 Additional tax at 22% $          2,310

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