Financial Question

[CFAHouston]

The year-end financial statments for a firm using LIFO accounting show an inventory level of $5,000, cost of goods sold of $16,000, and inventory purchase of $14,500. If the LIFO reserve is $4,000 at year end and was $1,500 at the begining of the year, what would the COGS have been using FIFO accounting?

A. 11,000
B. 12,000
C. 13,500
D. 18,500

 

[jamespucyk]

C 13.5

4k-1.5 = Change in Lifo Reserve = 2.5

COGS under FIFO = LIFO COGS - Change in Lifo Reserve

 

[PhillyTom]

Know COGS and inventory like the back of your hand. They hit on it pretty hard in December (and June). (1 for 2 in level one).

 

[financegal]

answer is c

 

[jamespucyk]

I actually really dig LIFO/FIFO, I say bring it on.

 

[CFAHouston]

LOL..spoken like a true guru

btw, answer is C.

 

[jamespucyk]

LOL, thx. actually the only part of FSA I still am a bit shaky on is Leases, I've never been a huge fan, but I am pretty knowledgable it right now thanks to Schweser, but not as confident as I would like to be.