EFFECTS OF FIFO AND LIFO WITH INVENTORY REDUCTIONS. Sheepskin Company sells to colleges and universities a special paper that is used for diplomas. Sheepskin typically makes one purchase of the special paper each year. You have the following data for the 3 years ending in 19x5:

REQUIRED:
1. What would the ending inventory and cost of goods sold be for each year if FIFO is used?
2. What would the ending inventory and cost of goods sold be for each year if LIFO is used?
3. For each year, explain the cause of the differences in cost of goods sold under FIFO and LIFO.

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19x3 Beginning inventory Purchases Sales 19x4 Beginning inventory Purchases Sales 19x5 Beginning inventory Purchases Sales 0 pages 10,000 pages at $1.60 per page 8,500 pages 1,500 pages 16,200 pages at $2.00 per page 15,000 pages 2,700 pages 18,000 pages at $2.50 per page 20,100 pages