Matthews, Inc. is in its first year of operating as a wholesale company. During the accounting period just completed, it experienced consistently rising prices on the products it buys and sells. The following partial income statement information was developed by its chief accountant using two different cost flow assumptions, FIFO and LIFO.
Case 1 Case 2
Sales $1,500,000 $1,500,000
Cost of goods sold 975,000 996,000
Gross Margin $525,000 $504,000
Determine which case is FIFO and which is LIFO. State which case would result in the higher inventory value on the balance sheet and indicate why.