L. Enterprises uses the LIFO inventory method. At the end of the 2021 accounting period, the company reported $12,000 of net earnings on its Income Statement. The inventory balance on the 2021 Balance Sheet is $9,000. In the footnotes, the LIFO reserve at the end of 2021 is $4,000, and the LIFO reserve at the end of 2020 is $3,500. R. Co. uses FIFO and reported $14,500 of net earnings on the 2021 Income Statement. Which company has higher earnings if both companies used the same inventory method?

L. Enterprises uses the LIFO inventory method. At the end of the 2021 accounting period, the company reported $12,000 of net earnings on its Income Statement. The inventory balance on the 2021 Balance Sheet is $9,000. In the footnotes, the LIFO reserve at the end of 2021 is $4,000, and the LIFO reserve at the end of 2020 is $3,500. R. Co. uses FIFO and reported $14,500 of net earnings on the 2021 Income Statement. Which company has higher earnings if both companies used the same inventory method?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 2MC: The following items were included in Venicio Corporations inventory account on December 31, 2019:...

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