Cost The following are the inventory records of the Homestead Company: Units Total January 1 40 $12 $480 Purchases: February 10 July 15 November 1 750 December 10 480 Available 180 $2.530 260 560 The company uses a periodic inventory system. Ending inventory consists of 30 units. Required: 1. Calculate ending inventory and cost goods sold, using: (a) FIFO and (b) LIFO 2. Define the LIFO Reserve and calculate the amount of the LIFO Reserve. 3. a. How can the LIFO Reserve of a company using LIFO be liquidated. 36. What impact would this have on its profits Solution a. FIFO Ending Inventory Cost of Sales b. LIFO Ending Inventory Cost of Sales 2. The LIFO Reserve is defined as: The amount of the LIFO Reserve is $ 3a. How can the LIFO Reserve be liquidated 36. How will a liquidation of the LIFO Reserve affect profits of a company