Problem: K. Co. uses LIFO inventory method. At the end of the 2006 accounting period, the company reported $10,000 of net earnings on I/S. The inventory balance on the 2006 B/S is $7,000. In the footnotes, LIFO's reserve at the end of 2006 is $3,000 and LIFO's reserve at the end of 2005 is $2,500. JJ Co. uses FIFO and reported 10,300 of net earnings on the 2006 I/S. Which company would have higher earnings if both of the companies used the same inventory method?
A. KK
B. JJ
C. Cannot determine