Sheepskin Company sells to colleges and universities a special paper that is used for diplomas. Sheepskin typically makes one purchase of the special paper each year on January 1. Assume that Sheepskin uses a perpetual inventory system. You have the following data for the three years ending in 2011:

Required:
1. What would the ending inventory and cost of goods sold be for each year if FIFO is used?
2. What would the ending inventory and cost of goods sold be for each year if LIFO is used?
3. For each year, explain the cause of the differences in cost of goods sold under FIFO and LIFO.

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2009 Beginning inventory Purchases Sales 2010 Beginning inventory Purchases Sales 2011 Beginning inventory Purchases Sales 0 pages 10,000 pages at $1.60 per page 8,500 pages 1,500 pages 16,200 pages at $2.00 per page 15,000 pages 2,700 pages 18,000 pages at $2.50 per page 20,100 pages