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14 August, 05:58

Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results. In each space below, place the correct sign; less than (), or equal (=) for each comparison, assuming periods of rising prices.

1. FIFO inventory vs LIFO inventory

2. FIFO cost of goods sold vs LIFO cost of goods sold

3. FIFO net income vs LIFO net income

4. FIFO income taxes vs LIFO income taxes

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  1. 14 August, 06:12
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    1. FIFO inventory greater than (>) LIFO inventory

    2. FIFO cost of goods sold less than (<) LIFO cost of goods sold

    3. FIFO net income greater than (>) LIFO net income

    4. FIFO income taxes greater than (>) LIFO income taxes

    Explanation:

    FIFO assigns the lowest amount to cost of goods sold yielding the highest gross profit LIFO assigns the highest amount cost of goods sold yielding the lowest gross profit and net income, which also yields a temporary tax advantage by postponing payment of some income tax

    For numerical understanding we

    Use the following data

    Working 1

    Date Explanation Units Unit Cost Total Cost

    Sept. 1 Inventory 12 $106 $ 1,272

    Sept. 12 Purchases 45 109 4,905

    Sept. 19 Purchases 55 110 6,050

    Sept. 26 Purchases 21 111 2,331

    Totals 133 $14,558

    Sales 105 Units at $ 125 = $ 13125

    And after Calculation we get

    FIFO ending inventory at 30 September : $3101

    LIFO ending inventory at 30 September $3016

    FIFO Cost OF Goods Sold $ 11487

    LIFO Cost OF Goods Sold $ 11572
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