Chapter 10, Problem 10.3P

LIFO, Conversion to FIFO. The Outsider Company, Inc. provided the following information regarding its inventory for the year ended December 31, 2019. It made all of the purchases before it had any sales transactions for the year.

Description	LIFO		FIFO
Beginning inventory;	8,000@ $6	$48,000	4,000 @ $7	$ 28,000
January 1, 2010	8,000 @ $7	56,000	12,000 @ $8	96,000
Total beginning inventory	16,000 units	$ 104,000	16,000 units	$124,000
Purchases	14,000@ $9	126,000	14,000 @$9	126,000
Cost of goods available	30,000 units	$ 230,000	30,000 units	$250,000
Ending inventory	6,000 @ $8	36,000	6,000 @ $9	54,000
Cost of goods sold	24,000 units	$ 194,000	24,000 units	$196,000

Required

1. a. Compute the LIFO reserve at the beginning of the year (i.e., at December 31, 2018).
2. b. Compute the LIFO reserve at the end of the year (i.e., at December 31, 2019)
3. c. Illustrate how the firm can use the LIFO reserve to convert ending inventory from the LIFO to the FIFO basis for Doth years (i.e., 2018 and 2019).
4. d. Illustrate how the firm can use the LITO reserve to convert the LIFO cost of goods sold to the FIFO cost of goods sold for 2019
5. e. Describe the conditions that indicate that there is a LIFO liquidation tor 2019.