Answer:
a) $360,000
b) $52,000
c) Net Income 360,000 344,000 316,000
Explanation:
Part 1) Determine the net income for 2020 as follows using the First In First Out (FIFO)
= FIFO 2020 = $450,000 - The Income Tax
= $450,000 - ($450,000 x 0.35)
= $450,000- $90,000
= $360,000
Part 2) Compute the cumulative effect in change of the weighted average to FIFO
Weighted average FIFO Difference [email protected]%(difference) net effect
2018 370,000 395,000 25,000 5,000 20,000
2019 390,000 430,000 40,000 8,000 32,000
Total in Net effect $52,000
Part 3) Show comparative income statement as follows
2020 2019 2018
Income before tax 450,000 430,000 395,000
Remove the tax (@20) 90,000 86,000 79,000
Net Income 360,000 344,000 316,000
