Butler Company reported ending inventory at December 31, 2014 of $1,200,000 under LIFO. It also reported a LIFO reserve of $210,000 at January 1, 2014, and $300,000 at December 31, 2014. Cost of goods sold for 2014 was $4,600,000. If Butler Company had used FIFO during 2014, its cost of goods sold for 2014 would have been
A) $4,900,000.
B) $4,690,000.
C) $4,510,000.
D) $4,300,000.

Question

Quizplus · Accepted Answer

The LIFO reserve increased by $90,000 ($300,000 - $210,000) during 2014. To convert LIFO COGS to FIFO COGS, subtract the increase in the LIFO reserve from the LIFO COGS: $4,600,000 - $90,000 = $4,510,000.

Butler Company Reported Ending Inventory at December 31, 2014 of $1,200,000