Cansela Corporation uses a periodic inventory system and the LIFO

| July 29, 2018

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:

2,000
units at $12 per unit

=

$

24,000

2,500
units at $16 per unit

=

40,000

$

64,000

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:

Purchases

Sales

2013

10,000

11,000

2014

13,000

14,500

2015

12,000

13,000

Required:

1.

Calculate cost of
goods sold for 2013, 2014, and 2015.

Cost of Goods Sold

2013

$

2014

$

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.)

LIFO

2013

$

(Click to select)
loss
profit

2014

$

(Click to select)
profit
loss

2015

$

(Click to select)
loss
profit

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%.(Input all amounts as positive values.)

Cost of Goods Sold

Net Income

2013

(Click to select)
Increase
Decrease
by

(Click to select)
Increase
Decrease
by

2014

(Click to select)
Decrease
Increase
by

(Click to select)
Decrease
Increase
by

2015

(Click to select)
Decrease
Increase
by

(Click to select)
Increase
Decrease
by

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