L08-4 EXERCISE 8.4 Effects of Different Cost Flow Assumptions following information was taken from the company's recent financial statements (dollar amoum Gable, Inc. is a provider of home furnishings. The company uses the FIFO inventory method. The are in thousands) Cost of goods sold Income before taxes Income taxes expense (and payments) Net income Net cash provided by operating activities $1,850,000 125.000 52.500 72,500 123.250 The financial statements also revealed that had Gable been using LIFO, its cost of goods sold would have been $1,865,000. The company's income taxes and payments amount to approxi- mately 40 percent of income before taxes. a. Explain how LIFO can result in a higher cost of goods sold. Would you expect LIFO to result in a greater or lesser valuation of the company's ending inventories? Defend your answer. b. Assuming that Gable had been using LIFO, compute the following amounts for the current year. Show your supporting computations with dollar amounts in thousands. 1. Income before taxes 2. Income taxes expense (which are assumed equal to income taxes actually paid) 3. Net income 4. Net cash provided by operating activities