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.