An analyst is evaluating the balance sheet of a US company that uses last in, fi rst out(LIFO) accounting for inventory. Th e analyst collects the following data:31 Dec 05 31 Dec 06Inventory reported on balance sheet $500,000 $600,000LIFO reserve $ 50,000 $70,000Average tax rate 30% 30%After adjusting the amounts to convert to the fi rst in, fi rst out (FIFO) method, inventory at31 December 2006 would be closest to:A . $600,000.B . $620,000.C . $670,000.
An analyst is evaluating the balance sheet of a US company that uses last in, fi rst out(LIFO) accounting for inventory. Th e analyst collects the following data:31 Dec 05 31 Dec 06Inventory reported on balance sheet $500,000 $600,000LIFO reserve $ 50,000 $70,000Average tax rate 30% 30%After adjusting the amounts to convert to the fi rst in, fi rst out (FIFO) method, inventory at31 December 2006 would be closest to:A . $600,000.B . $620,000.C . $670,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
An analyst is evaluating the
(LIFO) accounting for inventory. Th e analyst collects the following data:
31 Dec 05 31 Dec 06
Inventory reported on balance sheet $500,000 $600,000
LIFO reserve $ 50,000 $70,000
Average tax rate 30% 30%
After adjusting the amounts to convert to the fi rst in, fi rst out (FIFO) method, inventory at
31 December 2006 would be closest to:
A . $600,000.
B . $620,000.
C . $670,000.
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