White Corporation uses the FIFO method for internal reporting purposes and LIFO for external reporting purposes.The balance in the LIFO Reserve account at the end of 2010 was $80,000.The balance in the same account at the end of 2011 is $120,000.White's Cost of Goods Sold account has a balance of $600,000 from sales transactions recorded during the year.What amount should White report as Cost of Goods Sold in the 2011 income statement?

Question

Quizplus · Accepted Answer

The increase in the LIFO Reserve from $80,000 to $120,000 indicates a $40,000 increase. To adjust the COGS from FIFO to LIFO, add the increase in the LIFO Reserve to the COGS: $600,000 + $40,000 = $640,000.

White Corporation Uses the FIFO Method for Internal Reporting Purposes