Harmon Fraiser Industries Had Beginning Inventory of 20,000 Candles and an Ending

question 64

Multiple Choice

Harmon Fraiser Industries had beginning inventory of 20,000 candles and an ending inventory of 15,000 candles. Harmon originally paid $1.80 each when it purchased the candles. The current replacement cost of the candles is $2.20 each. Each candle retails for $3.00. Harmon uses the LIFO method to account for its inventory. How did the LIFO liquidation affect the company's taxable income?

• A)Taxable income increased because of the liquidation.
• B)Taxable income decreased because of the liquidation.
• C)Taxable income remained the same despite the liquidation.
• D)You cannot determine taxable income from the given data.

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