The accountant at Cedric Company has determined that income before income taxes amounted to $7,000 using the FIFO costing assumption. If the income tax rate is 30% and the amount of income taxes paid would be $315 greater if the LIFO assumption were used, what would be the amount of income before taxes under the LIFO assumption?

Question

Evangeline

Business

14 September, 05:43

The accountant at Cedric Company has determined that income before income taxes amounted to $7,000 using the FIFO costing assumption. If the income tax rate is 30% and the amount of income taxes paid would be $315 greater if the LIFO assumption were used, what would be the amount of income before taxes under the LIFO assumption?

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Shaylee Simpson · Answer 1

8050

Explanation:

he amount of income before taxes under the LIFO assumption would be:

8050 calculated as follows:

Income tax under FIFO: 7000*.30 = 2100

Income Tax under LIFO = 2100 + 315 = 2415

Income before taxes under LIFO = 2415/.30 = 8050