Cranchey Company Reported a LIFO Ending Inventory of $670,000 on Its

Multiple Choice

Cranchey Company reported a LIFO ending inventory of $670,000 on its balance sheet at December 31, 2016. Cranchey's disclosure notes to the financial statements reported that the LIFO Reserve at December 31, 2015 was $32,000 and the LIFO Reserve at December 31, 2016 was $40,000. Which of the following statements is correct for Cranchey Company for the effect of the LIFO Reserve in 2016 in converting LIFO amounts to FIFO amounts?

A) Cost of goods sold would have been higher by $40,000 under FIFO.
B) Pretax income would have been higher by $32,000 under FIFO.
C) Pretax income would have been higher by $8,000 under FIFO.
D) Cost of goods sold would have been higher by $8,000 under FIFO.