Solution-Which method would result in the higher pretax

Which method would result in the higher pretax income

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Reference no: EM132484623

DONNER COMPANY Partial Income Statement For the Month Ended January 31,

	2014

	Units	Total cost	Unit cost¹
Inventory, Jan. 1	500	2,365	4.73
Purchases	600	3,600	6
Purchases Goods available for sale Ending inventory Cost of goods sold Sales (given) Selling price per unit	160 __	1,280	8
	1,260	7,245
	640
	620

	620 j
	$16

Question a). Which method would result in the higher pretax income? EPS?

Question b). Which method would result in the lower income tax expense? Explain, assuming a 30 percent average tax rate.

Question c). Which method would produce the more favorable cash flow? Explain.

Question d). Prepare a summarized income statement through gross profit for the month of January under each method of inventory.

Reference no: EM132484623

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Which method would result in the higher pretax income

Reference no: EM132484623

Reference no: EM132484623

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