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eBook Calculator Problem 12-93A Accounting Alternatives and Financial Analysis Lemon Automobiles has asked your bank for a $100,000 loan to expand its sales facility. Lemon provides you with the following data: 2019 2018 2017 $5,800,000 $5,400,000 112,000 Sales revenue Net income Ending inventory (FIFO)* Purchases Depreciable assets $6,100,000 119,000 665,000 5,370,000 1,240,000 600,000 106,000 500,000 4,860,000 1,090,000 5,105,000 1,150,000 * The 2016 ending Inventory was $470,000 (FIFO). Your inspection of the financial statements of other automobiles sales firms indicates that most of these firms adopted the LIFO method in the late 1970s. You further note that Lemon has used 5% of depreciable asset cost when computing depreciation expense and that other automobile dealers use 10%. Assume that Lemon's effective tax rate is 25% of income before tax. Also assume the following: 2019 $508,000 2018 $495,000 2017 $480, Ending inventory (LIFO) The 2016 ending inventory was $470,000 (UFO). Required: Check My Work 3 more Check My Work uses remaining Email Instructor Save and Exit Submit Assignment for Grading 1. Compute cost of goods sold for 2017-2019, using both the FIFO and the LIFO methods. Year Cost of Goods Sold FIFO Method LIFO Method 970.000 X 500,000 2017 x 2018 4,860,000 X 5,105.000 X 2019 -500,000 -500,000 2. Compute depreciation expense for Lemon for 2017-2019, using both assets. and 10% of the cost of deprecate Depreciation Expense Year 104 2017 109,000 54,500 2018 115,000 $ 57,500 2019 $ 124,000 62,000 3. Recompute Lemon's net income for 2017-2019, using LIFO and 10% depreciation (Don't forget the tax impact of the increases in cost of goods sold and depreciation expense.) NAL Net Income 2017 $ 330,750 X 2018 446,250 x 2019 464,250 X Check My Work more Check My Work uses remaining Next > Email Instructor Save and be submit Assignment for Grading TYTULO

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