Effects of FIFO and LIFO

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 on January 1. Assume that Sheepskin uses a perpetual inventory system. You have the following data for the 3 years ending in 2013:

2011
Beginning Inventory	0 pages
Purchases	10,000 pages at $1.40 per page
Sales	8,500 pages
2012
Beginning Inventory	1,500 pages
Purchases	16,200 pages at $2.10 per page
Sales	15,000 pages
2013
Beginning Inventory	2,700 pages
Purchases	18,000 pages at $2.80 per page
Sales	20,100 pages

Required:

1. What would the ending inventory and cost of goods sold be for each year if FIFO is used?

	2011	2012	2013
Ending inventory	$	$	$
Cost of goods sold	$	$	$

2. What would the ending inventory and cost of goods sold be for each year if LIFO is used?

	2011	2012	2013
Ending inventory	$	$	$
Cost of goods sold	$	$	$

3. Conceptual Connection: For each year, explain the cause of the differences in cost of goods sold under FIFO and LIFO.