The Outsider Company, Inc. provided the following information regarding its inventory for the year ended December 31, 2015. It made all of the purchases before any sales transactions for the year.

Required
a. Compute the LIFO reserve at the beginning of the year (i. e., at December 31, 2014).
b. Compute the LIFO reserve at the end of the year (i. e., at December 31, 2015).
c. Illustrate how the firm can use the LIFO reserve to convert ending inventory from the LIFO to the FIFO basis for both years ( i. e., 2014 and 2015).
d. Illustrate how the firm can use the LIFO reserve to convert the LIFO cost of goods sold to the FIFO cost of goods sold for 2015.
e. Describe the conditions that indicate that there is a LIFO liquidation for 2015.

Transcribed Image Text:

Description LIFO FIFO 4,000 a s7 12,000 s8 16,000 units 14,000 @ $9 30,000 units 6,000@ S9 24,000 units 28,000 96,000 $124,000 126.000 $250,000 54,000 $196.000 Beginning inventory: January 1, 2015 Total Beginning inventory Purchases Cost of goods available Ending inventory Cost of goods sold 8,000 s6 8,000 $7 16,000 units 14,000 @ $9 30,000 units 6,000@ S6 24,000 units S 48,000 56.000 $104,000 126,000 $230,000 36,000 $194,000