Answer the following questions regarding the following company by examining the

Question

Answer the following questions regarding the following company by examining the summary of significant policies:

https://www.sec.gov/cgi-bin/viewer?action=view&cik=86144&accession_number=0000086144-15-000004&xbrl_type=v#

Required:

1. What types of inventory does the company have?

2. For each type of inventory, what method does the company use for evaluating the inventory?

3. If the company had used FIFO or FIFO approximation for all inventory, estimate what the beginning and ending inventory balances for the fiscal years reported, would have been if the company had used FIFO for all of its inventories.

4. Estimate the effect on cost of goods sold (that is, would it have been greater or less and by how much?) for the most recent fiscal year if the company had used FIFO for all of its inventories.

5. Would income from continuing operations, before taxes, have been materially different if the company had used inventory methods that approximated FIFO for all inventory? Express your answer as a percentage.

Explanation / Answer

1. The company has the following types of inventories

a. Mrchandise inventory

b. Perishables

c. Pharmacy

d. Fuel inventory

2. a. Merchandise inventory -- LIFO

b. Perishables -- FIFO

c. Pharmacy -- FIFO

d. Fuel -- FIFO

3.

  Year end 2014 Year end 2013

Inventory as per Balanac sheet 2,187.90 2,089.60

Value of merchandise iventory under LIFO -1,755.30 -1,643.20   

432.60 442.40

Value of merchandise inventory under FIFO(current cost) 1,808.40 1,701.30

Value of total inventory under FIFO 2,241.00 2,143.70

4. The cost of goods would have been lower than that reported since the value of inventory under FIFO will be higher compared to that under LIFO.

2014 2013

Value of inventory under LIFO 2,187.90 2,089.60

Value of inventory under FIFO -2,241.00 -2,143.70

Effect of FIFO valuation on cost of goods sold -53.10 -54.10

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.