Recording and Reporting a LIFO Reserve

At the end of the annual accounting period, the inventory records of Boton Company show the following. The company uses FIFO for internal purposes and LIFO for income tax and external reporting purposes.

	2020	2021
Ending inventory at FIFO	$120,000	$216,000
Ending inventory at LIFO	48,000	84,000

a. Assume that the inventory difference is recognized in the accounts, and the balance in the allowance account was zero at the beginning of 2020. Provide the necessary journal entry at year-end 2020 and 2021.

Date	Account Name	Dr.	Cr.
Dec. 31, 2020
Dec. 31, 2021

b. Show how inventory should be shown on its 20202021 comparative balance sheets.

Balance Sheet, Dec 31	2020	2021
Current Assets
Inventory

c. If the company reported cost of goods sold of $576,000 in 2021 using LIFO, what would cost of goods sold be using FIFO?

$ (Answer)

Please answer all parts of the question.