Problem: Wilmington Corporation reported the following in its 2009 annual report:
2008 2009
Inventories $87,200 $102,500
Accounts Payable $30,000 $38,800
Cost of products sold $300,000
Wilmington measures its inventory on a LIFO basis. The footnote relating to inventory stated "If inventories were valued on the FIFO basis, total inventories would have been $130,800 and $106,300 at December 31, 2009, and December 31, 2008 respectively." Assume that the cost of product sold relates entirely to items the company carries in its inventory.
Questions:
1. How much larger would ending inventory be under FIFO compared to LIFO at the end of 2008?
2. How much larger would ending inventory be under FIFO compared to LIFO at the end of 2009?
3. How much lower income did LIFO report for 2009 compared to income that would have been reported under FIFO? (Ignore Taxes)