The management of Tritt Company has asked its accounting department to describe the effect upon the company’s financial position and its income statements of accounting for inventories on the LIFO rather than the FIFO basis during 2022 and 2023. The accounting department is to assume that the change to LIFO would have been effective on January 1, 2022, and that the initial LIFO base would have been the inventory value on December 31, 2021. Presented below are the company’s financial statements and other data for the years 2022 and 2023 when the FIFO method was employed.

Other data:
Instructions

Name the account(s) presented in the financial statements that would have different amounts for 2023 if LIFO rather than FIFO had been used, and state the new amount for each account that is named. Show computations.

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Financial Position as of 12/31/21 12/31/22 12/31/23 Inventory $120,000 $140,000 $176,000 Other assets 160,000 170,000 200,000 Accounts receivable 80,000 100,000 120,000 Cash 90,000 $450,000 154,000 $540,000 $650,000 130,000 Total assets Share capital-ordinary $200,000 $200,000 $200,000 Retained earnings 140,000 200,000 260,000 Accounts payable 40,000 60,000 80,000 Other liabilities 70,000 80,000 110,000 Total equity and liabilities $450,000 $540,000 $650,000 Income for Years Ended 12/31/22 12/31/23 Sales revenue $900,000 $1,350,000 Less: Cost of goods sold 505,000 756,000 Other expenses 205,000 304,000 710,000 1,060,000 Income before income taxes 190,000 290,000 Income taxes (40%) 76,000 116,000 Net income $114,000 $ 174,000