Question

The Sky Corporation reported at the end of the year a LIFO reserve of $25,000. The beginning LIFO reserve was $20,000. The cost of goods sold was $197,500 under LIFO. The cost of goods sold under FIFO should be

Answer 1

the cost of goods sold under FIFO is $192,500

Step-by-step explanation:

The computation of the cost of goods sold under FIFO is shown below:

= cost of goods sold under LIFO - (end of year LIFO reserve- beginning LIFO reserve)

= $197,500 - ($25,000 - $20,000)

= $197,500 - $5,000

= $192,500

Hence, the cost of goods sold under FIFO is $192,500

We simply applied the above formula so that the correct value could come

And, the same is to be considered