Holliday Company's inventory records show the following data: A physical inventory on December 31 shows 2,000 units on hand. Holliday sells the units for $12 each. The company has an effective tax rate of 20%. Holliday uses the periodic inventory method. What is the difference in taxes if LIFO rather than FIFO is used?
A) $800 additional taxes
B) $3,200 tax savings
C) $4,000 tax savings
D) $4,000 additional taxes

Question

Holliday Company's inventory records show the following data:  A physical inventory on December 31 shows 2,000 units on hand. Holliday sells the units for $12 each. The company has an effective tax rate of 20%. Holliday uses the periodic inventory method. What is the difference in taxes if LIFO rather than FIFO is used?
A) $800 additional taxes 
B) $3,200 tax savings 
C) $4,000 tax savings 
D) $4,000 additional taxes

Quizplus · Accepted Answer

The Answer of Holliday Company's inventory records show the following data:  A physical inventory on December 31 shows 2,000 units on hand. Holliday sells the units for $12 each. The company has an effective tax rate of 20%. Holliday uses the periodic inventory method. What is the difference in taxes if LIFO rather than FIFO is used?
A) $800 additional taxes 
B) $3,200 tax savings 
C) $4,000 tax savings 
D) $4,000 additional taxes

Holliday Company's Inventory Records Show the Following Data: a Physical