XRY Ltd is a US-based retailer and it uses LIFO method for valuation of inventory....
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Accounting
XRY Ltd is a US-based retailer and it uses LIFO method for valuation of inventory. Following information is obtained from its inventory records for 2019:
| Inventory | Units | Unit price $ |
| Opening balance | 5000 | 10 |
| January purchases | 5000 | 12 |
| April purchases
| 5000 | 14 |
| June purchases | 5000 | 16 |
| Sold during 2019 | 19000 |
You are require to answer the following (no calculations are necessary):
a) In light of US-GAAP, what are your key observations regarding cost of inventory balance and units sold?
b) What are the potential consequences of current inventory management on profitability and availability of inventory?
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