By how much did net income increase due to the liquidation

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Reference no: EM132944211

Question - The inventories disclosure note in the 2021 financial statements for Savers Market included the following:

"During fiscal 2021, 2020 and 2019, inventory quantities in certain LIFO layers were reduced. These reductions resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of fiscal 2021, 2020 and 2019 purchases. As a result, cost of goods sold decreased by $30, $22 and $25 in fiscal 2021, 2020 and 2019, respectively. All inventories are stated at the lower of cost or current market values. Cost for inventories at the majority of our operations is determined on a last-in, first-out ("LIFO") basis."

Required -

a. The disclosure note indicates an inventory liquidation during 2021, 2020, and 2019. By how much did net income in 2021 increase due to the liquidation? Assume an income tax of 40%.

b. What additional income tax payments did the 2021 liquidation cost Savers Market?

Reference no: EM132944211

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