S6-8. (Learning Objective 3: Managing income taxes under the LIFO method) Stone Saxophone Company is nearing the end of its worst year ever. With two weeks until year-end, it appears that net income for the year will have decreased by 25% from last year. Jason Stone, the president and principal shareholder, is distressed with the year’s results. Stone asks you, the financial vice president, to come up with a way to increase the business’s net income. Inventory quantities are a little higher than normal because sales have been slow during the last few months. Stone uses the LIFO inventory method, and inventory costs have risen dramatically during the latter part of the year.

Complete the memorandum to Jason Stone to explain how the company can increase its net income for the year. Explain your reasoning in detail. Stone is a man of integrity, so your plan must be completely ethical.