The Grimstad Company uses FIFO for internal reporting purposes and LIFO for financial reporting and income tax purposes. At the end of 2007 the following information was obtained from the inventory records:

Required
1. Prepare the necessary adjusting journal entry, assuming that the company converts the accounts to LIFO at the end of 2007.
2. Indicate how the company would disclose the inventory value on its comparative balance sheets prepared at the end of 2007.
3. By how much would the company€™s cost of goods sold be different in 2007 if it used FIFO for externalreporting?

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Ending inventory, FIFO Ending inventory, LIFO 2006 $100,000 80,000 2007 $140,000 115,000