The Following Information Is for Carmen Company for 2012

question 32

Essay

The following information is for Carmen Company for 2012:
Beginning inventory,100 units @$25
Units purchased,200 units @ $28
During the year,Carmen sold 250 units for $45 each.
Required:
a)Calculate gross margin assuming Carmen uses: 1)FIFO; 2)LIFO
b)Disregarding the effect of income taxes,what would be the dollar amount of difference in net income between FIFO and LIFO?
c)Calculate the cash flow from operating activities assuming that Carmen uses 1)LIFO; 2)FIFO.Assume that all transactions during the year were for cash.

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Definitions:

Gram

A mass measurement in the metric system, equivalent to 0.001 of a kilogram.

Kilogram

The base unit of mass in the International System of Units (SI), equivalent to the mass of the International Prototype of the Kilogram.

Kilometer

A unit of measurement equal to 1,000 meters, commonly used to measure distances.

Scientific Measurement

The process of obtaining a quantitative description of the properties of an object or event using instruments that adhere to a standard unit.