What would cost of goods sold for the year ended

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Reference no: EM131877451

Question - The following information is taken from Satin financial statements (amounts in thousands):

 

12/31/2010

12/31/2009

Inventory at LIFO

$219,686

$241,154

Cost of goods sold at LIFO

754,661

675,138

Stockholders' Equity

242,503

242,712

Net Income

31,185

64,150

Tax rate

37%

37%

Inventory Footnote: If the first-in, first-out method of accounting for inventory had been used, inventory would have been approximately $26.9 million and $25.1 million higher than reported at 12/31/2010 and 12/31/2009, respectively.

Required:

A) Calculate what inventory would have been at 12/31/2010 and 12/31/2009 had the FIFO inventory method been used.

B) What would cost of goods sold for the year ended 12/31/2010 have been if the FIFO inventory method been used? Show your computations.

C) Compute the inventory turnover ratio for 2010 using a LIFO cost-flow assumption.

D) Compute the inventory turnover ratio for 2010 using a FIFO cost-flow assumption.

E) Explain why the costs assigned to inventory under LIFO at the end of 2009 and 2010 are different than they are under FIFO.

Reference no: EM131877451

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