Cushinson corp. had a beginning inventory of $9,500 (250 units) and made three inventory purchases during the fiscal year: purchases units total cost 3/1/2016 400 $14,800 7/1/2016 450 $14,850 9/1/2016 550 $15,950 the company began operations on jan. 1, 20x6. costing uses the lifo method of determining cost of goods sold. first year sales were 1,300 units. the most likely effects of using lifo inventory costing as compared to fifo in cushinson's 20x6 financial statements are: a) lower net income; lower working capital. b) higher net income; lower working capital. c) higher net income; higher working capital.

C) higher net income; higher working capital.

                                          FIFO     LIFO

NET INCOME                   -13200  -10150

WORKING CAPITAL         -13200  -10150

Explanation:

FIFOPurchasesUnit costUnitsales_unitEnd. Inv.Mon.Cost

Jan-1          9.50038          250250               09.500

Jan-3         14.80037          400100          3003.700

Jan-7      14.85033          450           4500

jan-9      15.95029          550                  5500

     55.100                1.650         350            1.300  13.200

LIFOPurchasesUnit costUnitsales_unitEnd. Inv.Mon.Cost

Jan-1       9.50038          2500            2500

Jan-3      14.80037          4000           4000

Jan-7      14.85033          4500           4500

jan-9      15.95029          550350          20010.150

               55.100         1.650350         1.30010.150

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