Cansela Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. The company began 2021 with inventory of 4,500 units of its only product. The beginning inventory balance of $64,000 consisted of the following layers: 

2,000 units at $12 per unit = $24,000 

2,500 units at $16 per unit =  40,000 

Beginning inventory             $64,000 

During the three years 2021–2023 the cost of inventory remained constant at $18 per unit. Unit purchases and sales during these years were as follows: 

Required: 

1. Calculate cost of goods sold for 2021, 2022, and 2023. 

2. Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for each of the three years. 

3. Prepare the company’s LIFO liquidation disclosure note that would be included in the 2023 financial statements to report the effects of any liquidation on cost of goods sold and net income. Assume any liquidation effects are material and that Cansela’s effective income tax rate is 25%. Cansela’s 2023 financial statements include income statements for two prior years for comparative purposes.

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Purchases Sales 2021 10,000 11,000 2022 13,000 14,500 2023 12,000 13,000