Computing and Analyzing a LIFO Liquidation

Chide Inc. changed its inventory method to LIFO effective January $1.$ During December, Chide's storage facility was shut down due to a strike

resulting in a drastic reduction in inventory. The following data are available.

a$.$ What is the effect of the LIFO liquidation on after$-$tax profit or loss assuming a $25\%$ tax rate?

$$10,000$

b$.$ What is the accounting explanation for LIFO liquidation?

Due to lower cost inventory matched to current selling price which has increased over time.