Respuesta :
The accountant at Sheridan company has determined that income before income taxes amounted to 7800 using the FIFO costing assumption if the income tax rate is 20% and the amount of income taxes paid would be 300 greater if the LIFO assumptions were used. The amount of income before taxes under the LIFO assumption would be $9300
First-in, first-out, or FIFO. Last-in, first-out, or LIFO. These techniques are employed in inventory accounting. It has an impact on the sum that appears in the income statement's cost of goods sold section. While LIFO costing is utilized for tax accounting to reduce tax liabilities, FIFO costing is used to maximize income values in financial statements.
The amount of income before taxes under the LIFO assumption can be calculate as follows:
Income before income taxes : $7800
Income tax rate: 20%
Income tax paid under LIFO costing: $300
So, Income tax amount, FIFO = $7800 × 20% = $1,560
So, Tax amount, LIFO = $1,560 + $300 = $1,860
The income before taxes can be calculate by using following method,
Income before taxes, LIFO = $1,860 ÷ 20%
= $9300
Learn more about FIFO and LIFO at https://brainly.com/question/29532136
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