LIFO, Conversion to FIFO. 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 to film 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 to film can use the LIFO reserve to convert the LIFO cost of goods sold to the FIFO of goods sold for 2015.
c. Describe the conditions that indicate that there is a LIFO liquidation for 2015.
Show transcribed image textLIFO Description 8,000 $6 Beginning inventory: 48,000 January 1, 2015 8,000 $7 56,000 Total Beginning inventory 16,000 units $104,000 14,000 $9 Purchases 126,000 $230,000 Cost of goods available 30,000 units 6,000 $6 36,000 Ending inventory Cost of goods sold 24,000 units 194,000 FIFO 4,000 $7 28,000 96,000 12,000 $8 16,000 units $124,000 14,000 $9 126,000 30,000 units $250,000 6,000 $9 54,000 $196,000 24,000 units.