Matthews, Inc., is in its first year of operating as a wholesale company. During the accounting period just completed, it experienced consistently rising prices on the products it buys and sells. The following partial income statement information was developed by its chief accountant using two different cost flow assumptions, FIFO and LIFO.

Determine which case is FIFO and which is LIFO. State which case would result in the higher inventory value on the balance sheet and indicate why.

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Sales Cost of goods sold Gross margin Case 1 $1,500,000 975,000 $ 525,000 Case 2 $1,500,000 996,000 $504,000