The accounting net profit included a deduction of $30,000 for the cost of goods sold based on the following information:

The accounting net profit included a deduction of $30,000 for the cost of goods sold based on the following information:

Cost of Goods Sold Opening Stock Purchases

Closing Stock

Cost of Goods Sold

$ 50,000

40,000 90,000 60,000 30,000

For accounting purposes, the closing stock above was based using the LIFO Method. The Opening stock value for tax purposes was $50,000.

The FIFO Method however produces the following results for stock value at the end of

the year:

Cost Price Replacement Price Market Selling Value

$ 45,100 47,000 49,000

The company wishes to minimise its taxation. 

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