Chapter 22, Problem 7E

To determine

First In First Out (FIFO): First in first out (FIFO) is the method of inventory valuation indicating that the goods first purchased are sold first.

Last In First Out (LIFO): Last in first out (LIFO) is the method of inventory valuation meaning the goods which are purchased last will be sold first.

(a)

To compute: To record journal entries for the change of inventory method and to compute the net income for the years 2015, 2016, 2017 and 2018.

Given information:

Years	FIFO($)	Average cost($)	LIFO($)
2015	26,000	24,000	20,000
2016	30,000	25,000	21,000
2017	28,000	27,000	24,000
2018	24,000	30,000	26,000

To determine

(b)

To compute: To record journal entries for the change of inventory method and to compute the net income for the years 2015, 2016, 2017, and 2018.

Given information:

Years	FIFO($)	Average cost($)	LIFO($)
2015	26,000	24,000	20,000
2016	30,000	25,000	21,000
2017	28,000	27,000	24,000
2018	24,000	30,000	26,000