Question - Cansela Corporation uses a periodic inventory system and the LIFO method to value its inventory. The company began 2013 with inventory of 4,500 units of its only product. The beginning inventory balance of $64,000 consisted of the following layers:
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2,000 units at $12 per unit
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$24,000
|
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2,500 units at $16 per unit
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40,000
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$64,000
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During the three years 2013-2015 the cost of inventory remained constant at $18 per unit. Unit purchases and sales during these years were as follows:
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Purchases
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Sales
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2013
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10,000
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11,000
|
|
2014
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13,000
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14,500
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2015
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12,000
|
13,000
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Required:
1. Calculate cost of goods sold for 2013, 2014, and 2015.
2. Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for each of the three years. (Input all amounts as positive values.)
3. Determine the effects of LIFO liquidation on cost of goods sold and net income for 2013, 2014, and 2015. Cansela's effective income tax rate is 40%.