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What is the correct beginning inventory

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Problem - In 2019, Gail changed from the lower of cost or market FIFO method to the LIFO inventory method. The ending inventory for 2018 was:

Item

FIFO Cost

Replacement Cost

Lower of Cost or Market

A

$26,000

$15,000

$15,000

B

52,000

55,000

52,000

C

30,000

7,000

7,000



$74,000

Item C was damaged goods, and the replacement cost used was actually the estimated selling price of the goods. The actual cost to replace item C was $32,000.

Required -

a. What is the correct beginning inventory for 2019 under the LIFO method?

b. What immediate tax consequences (if any) will result from the switch to LIFO?

Reference no: EM132672570

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