7. LIFO vs FIFO Consider the following record of inventories for NINO (Nothing-In-Nothing-Out) Retailing: Year 1: bought 4 units for $12 each; sold 2 unit. Year 2: bought 5 units for $15 each; sold 4 units. Year 3: bought 6 units for $16 each; sold 8 units. Assume further that the company uses LIFO and the periodic inventory system. In addition, the marginal tax rate is 21%. 7.1 Complete the following table (shaded cells): Year ElAFo EluFo LIFO reserve ALIFO reserve COGSUFO -COGSFIFO NIFIFO - NluFO 1 2

7. LIFO vs FIFO Consider the following record of inventories for NINO (Nothing-In-Nothing-Out) Retailing: Year 1: bought 4 units for $12 each; sold 2 unit. Year 2: bought 5 units for $15 each; sold 4 units. Year 3: bought 6 units for $16 each; sold 8 units. Assume further that the company uses LIFO and the periodic inventory system. In addition, the marginal tax rate is 21%. 7.1 Complete the following table (shaded cells): Year ElAFo EluFo LIFO reserve ALIFO reserve COGSUFO -COGSFIFO NIFIFO - NluFO 1 2

Name: 7. LIFO vs FIFOConsider the following record of inventories for NINO
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Description: 7. LIFO vs FIFOConsider the following record of inventories for NINO (Nothing-In-Nothing-Out) Retailing:Year 1: bought 4 units for $12 each; sold 2 unit.Year 2: bought 5 units for $15 each; sold 4 units.Year 3: bought 6 units for $16 each; sold 8 un

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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7. LIFO vs FIFO
Consider the following record of inventories for NINO (Nothing-In-Nothing-Out) Retailing:
Year 1: bought 4 units for $12 each; sold 2 unit.
Year 2: bought 5 units for $15 each; sold 4 units.
Year 3: bought 6 units for $16 each; sold 8 units.
Assume further that the company uses LIFO and the periodic inventory system. In addition, the marginal tax rate is 21%.
7.1 Complete the following table (shaded cells):
Year
EluFo
LIFO reserve
ALIFO reserve
COGSIFO -COGSFIFO
NIFIFO - NIUFO
1
2
3
Outline all the adjustments (including amounts) to convert LIFO to FIFO on the Balance Sheet and the Income Statement for Year 3.
7.2

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