Cabinets-R-Us Uses FIFO for Internal Reporting Purposes and LIFO for Financial

question 33

Essay

Cabinets-R-Us uses FIFO for internal reporting purposes and LIFO for financial and income tax purposes.At the end of 2010, the following information was obtained from the inventory records:
$\begin{array}{lll}&2009&2010\\\text { Ending inventory, FIFO } & \$ 56,000 & \$ 66,250 \\\text { Ending inventory, LIFO } & 46,500 & 55,000\end{array}$ Required:
Prepare the necessary entry to convert to LIFO at the end of 2010.

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Definitions:

Standards

Performance goals, often relating to how much a product should cost.

Bonuses

Additional financial rewards given to employees as an incentive or reward for their performance.

Standard Costs

Predetermined costs serving as a benchmark for evaluating the actual cost performance of operations.

Measuring Efficiency

The process of evaluating the performance of a system, organization, or component by comparing its output with its input.