Shaffir INC. uses the LIFO cost method for financial reporting and tax purposes but maintains internal inventory records using the FIFO cost method. Shaffir adjusts the FIFO COGS and ending inventory amounts to LIFO by using a LIFO reserve account.

Shaffir INC reported the following information on the 2018 financial statements:

2018 2017

Inventory (at FIFO) $18,700 $12,400

Less: LIFO reserve ( 8,100) ( 4,000)

Inventory (at LIFO) 10,600 8,400

Cost of goods sold $19,800 $11,600

1. 2017 was the companys first year of business. What adjusting entry did Shaffir record at the end of 2017 to establish the LIFO reserve?

ASSETS = LIABILITIES + STOCKHOLDERS EQUITY NET INCOME

2. If Shaffir had used the FIFO cost method in 2017, what would COGS have been?

3. At the end of 2018, what adjusting entry did Shaffir make to update the LIFO reserve balance?

ASSETS = LIABILITIES + STOCKHOLDERS EQUITY NET INCOME

4. If Shaffir had used FIFO, what would have been the amount of COGS in 2018?

5. Assume the 2018 LIFO ending inventory was $16,600 instead of $10,600. What adjusting entry would Shaffir have recorded at the end of 2018 to update the LIFO reserve?

ASSETS = LIABILITIES + STOCKHOLDERS EQUITY NET INCOME