Question

Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,000 units at $ 38 ; purchases, 8,000 units at $ 40 ; expenses (excluding income taxes), $ 194,500 ; ending inventory per physical count at December 31 , current year, 1,800 units; sales, 8,200 units; sales price per unit, $ 75 ; and average income tax rate, 30 percent.Required:
(c) What would your answer to requirement (2) be, assuming that prices were falling? Expla

Answer 1

If the price falls, the opposite effect will occur. LIFO generates a higher net income tax rate and unfavorable cash flow than FIFO your answer to requirement, assuming that prices were falling.

LIFO assumes that the items purchased last are sold first.

When prices fall, it is assumed that goods bought later at lower costs will sell first, resulting in lower manufacturing costs and higher net income and income taxes.

The income tax rate is a tax levied on income or profits received by an individual or entity. Income tax is usually calculated as the product of tax rate and taxable income. Tax rates may vary depending on the type and characteristics of the taxpayer and the type of income.

Learn more about income tax rates at

brainly.com/question/26316390

#SPJ4