Reference no: EM132802231

Question - Use the following information for Parts A though D: GadgeTech began business on January 1, 2018. Annual inventory purchases and sales for the first three years of business were as follows:

Year	Inventory Purchases	Inventory Sales
2018	1,500 gadgets @ $ 6.00	1,100 gadgets @ $ 8.50
2019	1,800 gadgets @ $ 7.00	1,600 gadgets @ $ 10.00
2020	1,300 gadgets @ $ 8.00	1,550 gadgets @ $ 12.00

On December 31, 2020, the "Replacement Cost" of a Gadget was $ 9.00 per unit.

Given the information provided above, please answer the following questions:

A. If GadgeTech uses a Periodic LIFO Inventory system, what is their "Ending Inventory" balance on December 31, 2020?

B. Given your answer to Part A, the amount of "Unrealized Inventory Holding Gains" (i.e. "LIFO Reserve") that GadgeTech will report somewhere on their December 31, 2020 financial statements or in their footnotes is $ ______________________ .

C. By how much does the "LIFO Liquidation" increase GadgeTech's Pre-Tax 2020 Net Income, relative to the Pre-Tax 2020 Net Income that GadgeTech would have reported if they purchased an additional 250 gadgets on Dec. 31, 2020 @ $ 9.00 per gadget?