Question
1.ABC Company uses the LIFO method for inventory valuation. For the year ended December 31, 2023, the following information is provided: Item Units Cost per
1.ABC Company uses the LIFO method for inventory valuation. For the year ended December 31, 2023, the following information is provided:
Item | Units | Cost per Unit ($) |
Beginning Inventory | 1,000 | $10 |
Purchases | ||
- January 1 | 2,000 | $12 |
- April 1 | 3,000 | $14 |
Sales | ||
- Units Sold | 4,000 | |
Ending Inventory | 2,000 |
a. Calculate the cost of goods sold (COGS) using the LIFO method. b. Determine the value of ending inventory using the LIFO method. c. Discuss how the LIFO method affects ABC Company’s taxable income. d. Analyze the financial impact of using LIFO on ABC Company’s balance sheet.
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