Please help me answer this question K. Co. uses LIFO inventory method. At the end of the 2006accounting period, the company reported $10,000 of netearnings on I/S. The inventory balance on the 2006 B/S is$7,000. In the footnotes, LIFO reserve at the end of 2006 is$3,000 and LIFO reserve at the end of 2005 is $2,500. JJ Co.uses FIFO and reported 10,300 of net earnings on the 2006I/S. Which company has a higher earnings if both of thecompanies would use the same inventory method?

Step 1: Define Inventory methodThe inventory method is to evaluate the inventory (raw material or…

Answered: K. Co. uses LIFO inventory method. At…

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 67P

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Kumar Inc. uses a perpetual inventory system. At January 1, 2017, inventory was $214,000,000 at both cost and net realizable value. At December 31, 2017, the inventory was $286,000,000 at cost and $265,000,000 at net realizable value. Prepare the entry under (a) the cost-of-goods-sold method and (b) the loss method.

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