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AEP Industries Inc. is a leading manufacturer of plastic packing films. The company uses the LIFO inventory method for external reporting but maintains its internal records using FIFO. The following disclosure note was included in a recent quarterly report:
4. Inventories (in part)
Inventories are comprised of the following ($ in thousands):
January 31, 2016 October 31, 2015
Raw materials$55,883 $54,467
Finished goods 105,483 95,363
Supplies 7,065 7,522
168,431 157,352
Less: LIFO reserve (19,220) (23,853)
Inventories (under LIFO)$149,211 $133,499
Required:
1. Assume that AEP adjusts the LIFO reserve at the end of its quarter. Prepare the January 31, 2016, adjusting entry to record the cost of goods sold adjustment.
2. If AEP had used FIFO to value its inventories, what would cost of goods sold have been for the quarter ended January 31, 2016?
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