A company begins the year with a zero balance in the LIFO Reserve account. Based on an analysis of LIFO and FIFO, the company determines the LIFO Reserve should be $20,000 at the end of the year? Which journal entry is needed?

A company begins the year with a zero balance in the LIFO Reserve account. Based on an analysis of LIFO and FIFO, the company determines the LIFO Reserve should be $20,000 at the end of the year? Which journal entry is needed?

A) Debit Cost of Goods Sold for $20,000 and Credit LIFO Reserve for $20,000.

B) Debit LIFO Reserve for $20,000 and Credit Cost of Goods Sold for $20,000.

C) Debit Cost of Goods Sold for $20,000 and Credit Inventory for $20,000.

D) Debit Inventory for $20,000 and Credit Gain on Inventory for $20,000.

Answer rating: 100% (QA)

The correct journal entry to increase the LIFO Reserve by 20000 at the end of the year would ... View the full answer