67.   Suppose that David adopted the last-in, first-out (LIFO) inventory-flow method for his business inventory of widgets (purchase prices below).

 

 

Widget	Purchase Date	Direct Cost	Other Costs	Total Cost
#1	August 15	$2,100	$100	$2,200
#2	October 30	2,200	150	2,350
#3	November 10	2,300	100	2,400

 

 

 

In late December, David sold widget #2 and next year David expects to purchase three more widgets at the following estimated prices:

 

Widget               Purchase Date              Estimated Cost

#4	Early spring	$2,600
#5	Summer	2,260
#6	Fall	2,400

 

a)   What cost of goods sold and ending inventory would David record if he elects to use the LIFO method this year?

b)  If David sells two widgets next year, what will be his cost of goods sold and ending inventory next year under the LIFO method?

c)   How would you answer (a) and (b) if David had initially selected the first-in, first-out (FIFO) method instead of   LIFO?

d)  Suppose that David initially adopted the LIFO method, but wants to apply for a change to FIFO next year. What would be his §481 adjustment for this change, and in what year(s) would he make the adjustment?