The accountant at Patton Company has determined that income before income taxes amounted to $11,000 using the FIFO costing assumption. If the income tax rate is 30% and the amount of income taxes paid would be $600 greater if the LIFO assumption were used, what would be the amount of income before taxes under the LIFO assumption?
A) $11,600
B) $13,000
C) $9,000
D) $10,400

Question

Quizplus · Accepted Answer

The income tax difference of $600 implies that the income before taxes under LIFO is higher by $2,000 ($600 / 0.30). Therefore, the income before taxes under LIFO is $11,000 + $2,000 = $13,000.

The Accountant at Patton Company Has Determined That Income Before