Explain why super toys might prefer to use fifo

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Super Toys Company reported $355,000 as its ending inventory and $1,322,500 as cost of goods sold for Year 2 using the LIFO method. The company's LIFO reserve totaled $43,100 and $36,250 for Year 2 and Year 1, respectively.

A. If Super Toys Company had used FIFO instead of LIFO, how much would it have reported for its cost of goods sold?

B. How much did Super Toys save in income taxes as a result of using LIFO to value its inventories?

C. Generate an income statement for Year 2 for the Super Toys Company assuming FIFO is used.

D. Explain why Super Toys might prefer to use FIFO for financial statement reporting to shareholders rather than LIFO.

Reference no: EM132203719

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