The following is the Balance Sheet and Income Statement for Ella Corp:

LIFO BALANCE SHEET AT 12/31/2024:

Assets		Liabilities & Owners Equity
Cash and Cash Equivalents	$1,000	Accounts Payable	$3,000
Accounts Receivable, Net	$1,000	Notes Payable	$4,000
Inventory	$8,000	Common Stock	$13,000
PPE, Net	$20,000	Retained Earnings	$10,000
TOTAL ASSETS	$30,000	TOTAL LIAB. & OWNERS EQUITY	$30,000

LIFO INCOME STATEMENT FOR THE YEAR ENDING 12/31/2024:

Sales Revenue	$60,000
CGS	($40,000)
Gross Margin	$20,000
Other Gains/(Losses)	($11,000)
Pre-Tax Income	$9,000
Tax Expense (35%)	($3,150)
Net Income	$5,850

From its inception, Ella Corp. used LIFO to value its inventory. The LIFO reserve at 1/1/2024 is $500 and the LIFO reserve at 12/31/2024 is $1,200. You may assume that taxes are always 35% and all taxes are paid in cash.

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If, from its inception, Ella Corp. has used FIFO to value its inventory instead of LIFO, what would Ella Corp. reports as 12/31/2024 Cost of Goods Sold (CGS)?

Question 33 options:

	$40,000
	$20,000
	$20,700
	$39,300

Question 34 (2 points)

The following is the Balance Sheet and Income Statement for Ella Corp:

LIFO BALANCE SHEET AT 12/31/2024:

Assets		Liabilities & Owners Equity
Cash and Cash Equivalents	$1,000	Accounts Payable	$3,000
Accounts Receivable, Net	$1,000	Notes Payable	$4,000
Inventory	$8,000	Common Stock	$13,000
PPE, Net	$20,000	Retained Earnings	$10,000
TOTAL ASSETS	$30,000	TOTAL LIAB. & OWNERS EQUITY	$30,000

LIFO INCOME STATEMENT FOR THE YEAR ENDING 12/31/2024:

Sales Revenue	$60,000
CGS	($40,000)
Gross Margin	$20,000
Other Gains/(Losses)	($11,000)
Pre-Tax Income	$9,000
Tax Expense (35%)	($3,150)
Net Income	$5,850

From its inception, Ella Corp. used LIFO to value its inventory. The LIFO reserve at 1/1/2024 is $500 and the LIFO reserve at 12/31/2024 is $1,200. You may assume that taxes are always 35% and all taxes are paid in cash.

___________________

If, from its inception, Ella Corp. has used FIFO to value its inventory instead of LIFO, what would Ella Corp. reports as 12/31/2024 Gross Margin (also known as Profit Margin)?

Question 34 options:

	$20,000
	$20,700
	$40,000
	$39,300