Analyzing Inventories Using LIFO Inventory Footnote The footnote below is from the 2017 10-K report of Whole Foods Market, Inc., a Texas-based retail grocery chain. Inventories The Company values irventories at the luwer of cust ur market. Cust was delermined using the dullar value relail lasi-in, lirst-out (LIFO) method lur approximately 92.9% and 91.8% of imventories in fiscal years 2017 and 2016, respectively. Under the LIFO method, the cost assigned to items sold is based on the cost of the most recent items purchased. As a result, the costs of the first items purchased remain in inventory and are used to value encing inventory. The excess of estimated current costs over LIFO carrying value, ar LIFO reserve, was approximately 547 milian and 542 million at September 24, 2017 and September 25, 2016, respectively. Costs for remaining inventories are determined by the first-in, first-out methad. Cost before the LIFO adjustment is principally determined using the item cost method, which is calculated hy counting each item in inventory, assigning casts to each of these items based on the actual purchase cost (net of vendor allowances) of each item and recording the actual cast of items sold. Whole Foods operates the world's largest chain of natural and organic food stores. 2017, Whole Foods reported sales revenue of $16,030 millian and rost of gnods sold of $10,633 million. The following information was extracted Trom the e company's 2 s 2017 and 2016 balance sheets: (S millions) 2017 2016 Mrrchandise inventories s471 $517 a. Calculate the amount of inventories purchased by Whole Foods in 2017. S x milion b. What amount of gross profit would Whole Foods have reported if the FIFO method had been used to value all inventories? $ x million c. Caltulate the gross profit margin (GPM) as reported and assuming that the FIFO method had been used to value all inventories. Round to the nearest percentage (i.e. 0.453 = 45)
Analyzing Inventories Using LIFO Inventory Footnote The footnote below is from the 2017 10-K report of Whole Foods Market, Inc., a Texas-based retail grocery chain. Inventories The Company values irventories at the luwer of cust ur market. Cust was delermined using the dullar value relail lasi-in, lirst-out (LIFO) method lur approximately 92.9% and 91.8% of imventories in fiscal years 2017 and 2016, respectively. Under the LIFO method, the cost assigned to items sold is based on the cost of the most recent items purchased. As a result, the costs of the first items purchased remain in inventory and are used to value encing inventory. The excess of estimated current costs over LIFO carrying value, ar LIFO reserve, was approximately 547 milian and 542 million at September 24, 2017 and September 25, 2016, respectively. Costs for remaining inventories are determined by the first-in, first-out methad. Cost before the LIFO adjustment is principally determined using the item cost method, which is calculated hy counting each item in inventory, assigning casts to each of these items based on the actual purchase cost (net of vendor allowances) of each item and recording the actual cast of items sold. Whole Foods operates the world's largest chain of natural and organic food stores. 2017, Whole Foods reported sales revenue of $16,030 millian and rost of gnods sold of $10,633 million. The following information was extracted Trom the e company's 2 s 2017 and 2016 balance sheets: (S millions) 2017 2016 Mrrchandise inventories s471 $517 a. Calculate the amount of inventories purchased by Whole Foods in 2017. S x milion b. What amount of gross profit would Whole Foods have reported if the FIFO method had been used to value all inventories? $ x million c. Caltulate the gross profit margin (GPM) as reported and assuming that the FIFO method had been used to value all inventories. Round to the nearest percentage (i.e. 0.453 = 45)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Analyzing Inventories Using LIFO Inventory Footnote
The footnote below is from the 2017 10-K report of Whole Foods Market, Inc., a Texas-based retail grocery chain.
Inventories
The Cormpany values inventories at the luwer of cust ur market. Cust was delermined using the dullar value retail last-in, first-out ("LIFO") methud fur approximately 92.9% and 91.8% of inventories in fiscal years 2017 and 2016,
respectively. Under the LIFO method, the cost assigned to items sold is based on the cost of the most recent items purchased. As a result, the costs of the first items purchased remain in inventory and are used to value encing
inventory, The excess of estimated current costs onver LIFO carrying value, or LIFO reserve, was approximately 547 million and 542 million at September 24, 2017 and September 25, 2016, respectively. Costs for remaining inventories
are determined by the first-in, first-out methad. Cost before the LIFO adjustment is principally determined using the item cost method, which is calculated hy counting each item in inventory, assigning costs to each of these items
based on the actual purchase cost (net of vendor allowances) of each item and recording the actual cost of items sold.
Whole Foads operates the world's largest chain of natural and organic food stores. In 2017, Whele Foods reported sales revenue of $16,030 millian and cost of gnods sold of $10,633 million. The following information was extracted
from the company's 2017 and 2016 balance sheets:
($ millions)
2017 2016
Merchardise inventeries $471 $517
a. Calculate the amount of inventories purchased by Whole Foods in 2017. $
x million
b. What amount of gross profit would Whole Foods have reported if the FIFO method had been used to value all inventories? $
x million
t. Calculate the gross prufit margin (GPM) as reported and assurming that the FIFO method had been used to value all inventuries.
Round to the nearest percentage (i.e., 0,453 = 45)
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