The following info is for Buddy's inventory disclosure:20202019Raw materials and supplies $1,688 $1,369Work in process495453Finished Goods3,1822,976Total FIFO Value5,3654,798Less adjustment to LIFO1,4611,457Inventories$3,904 $3,341Buddy uses the LIFO method for a majority of their inventory. If Buddy hadused FIFO for all of their inventory, how much higher/lower would theirRetained Earnings balance be at the end of 2020? Assume a constant tax rateof 21%.

Basic Accounting Impact of change in Inventory valuation method on retained earning.

Buddy uses the LIFO method for a majority of their inventory. If Buddy had used FIFO for all of their inventory, how much higher/lower would their Retained Earnings balance be at the end of 2020? Assume a constant tax rate of 21%.

Buddy uses the LIFO method for a majority of their inventory. If Buddy had used FIFO for all of their inventory, how much higher/lower would their Retained Earnings balance be at the end of 2020? Assume a constant tax rate of 21%.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

The following info is for Buddy's inventory disclosure:
2020
2019
Raw materials and supplies $1,688 $1,369
Work in process
495
453
Finished Goods
3,182
2,976
Total FIFO Value
5,365
4,798
Less adjustment to LIFO
1,461
1,457
Inventories
$3,904 $3,341
Buddy uses the LIFO method for a majority of their inventory. If Buddy had
used FIFO for all of their inventory, how much higher/lower would their
Retained Earnings balance be at the end of 2020? Assume a constant tax rate
of 21%.

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