Question

The following information pertains to the inventory of Parvin Company for Year 3: Jan. 1 Beginning inventory 400 units @ $ 19 Apr. 1 Purchased 2,500 units @ $ 24 Oct. 1 Purchased 1,100 units @ $ 25 During Year 3, Parvin sold 3,400 units of inventory at $41 per unit and incurred $18,000 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income tax rate. Parvin started the period with cash of $147,900, inventory of $7,600, common stock of $131,000, and retained earnings of $24,500. a) Determine the cash flow from operating activities under FIFO and LIFO. (Round intermediate calculations and final answers to the nearest whole dollar amount. Amounts to be deducted should be indicated with minus sign.)

Answer 1

Answer with working notes is given below