Income statement and balance sheet information abstracted from a recent annual report of Wolverine World Wide, Incorporated, appears below: Balance Sheets ($ in millions) December 28, 2019 Current assets: Inventories Net sales Cost of goods sold Gross profit $ 348.2 December 29, 2018 $317.6 Income Statements ($ in millions) For the Year Ended December 28, 2019 $2,273.7 1,349.9 $923.8 December 29, 2018 $ 2,239.2 1,317.9 $921.3 The significant accounting policies note disclosure contained the following: Inventories The Company used the LIFO method to value inventories of $81.2 million and $61.1 million at December 28, 2019, and December 29, 2018, respectively. During fiscal years 2019 and 2018, a reduction in inventory quantities resulted in a liquidation of applicable LIFO inventory quantities carried at lower costs in prior years. This LIFO liquidation decreased cost of goods sold by $0.4 million and $4.6 million, respectively. If the FIFO method had been used, inventories would have been $11.4 million and $11.8 million higher than reported at December 28, 2019, and December 29, 2018, respectively. K Required: 1. Is Wolverine disclosing the FIFO cost of its LIFO inventory? 2. Calculate what beginning inventory and ending inventory would have been for the year ended December 28, 2019, if Wolverine had used FIFO for all of its inventories. 3. Calculate what cost of goods sold and gross profit would have been for the year ended December 28, 2019, if Wolverine had used FIFO for all of its inventories. 4. In 2019, Wolverine reported a LIFO liquidation. Did this liquidation increase or decrease cost of goods sold in 2019? Does this indicate that inventory costs have been increasing or decreasing over time?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter6: Merchandising Transactions

Section: Chapter Questions

Problem 15EA: The following select account data is taken from the records of Reese Industries for 2019. A. Use the...

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Income statement and balance sheet information abstracted from a recent annual report of Wolverine World Wide, Incorporated, appears below: Balance Sheets ($ in millions) December 28, 2019 Current assets: Inventories Net sales Cost of goods sold Gross profit $ 348.2 December 29, 2018 $317.6 Income Statements ($ in millions) For the Year Ended December 28, 2019 $2,273.7 1,349.9 $923.8 December 29, 2018 $ 2,239.2 1,317.9 $921.3 The significant accounting policies note disclosure contained the following: Inventories The Company used the LIFO method to value inventories of $81.2 million and $61.1 million at December 28, 2019, and December 29, 2018, respectively. During fiscal years 2019 and 2018, a reduction in inventory quantities resulted in a liquidation of applicable LIFO inventory quantities carried at lower costs in prior years. This LIFO liquidation decreased cost of goods sold by $0.4 million and $4.6 million, respectively. If the FIFO method had been used, inventories would have been $11.4 million and $11.8 million higher than reported at December 28, 2019, and December 29, 2018, respectively. K Required:

1. Is Wolverine disclosing the FIFO cost of its LIFO inventory?

2. Calculate what beginning inventory and ending inventory would have been for the year ended December 28, 2019, if Wolverine had used FIFO for all of its inventories.

3. Calculate what cost of goods sold and gross profit would have been for the year ended December 28, 2019, if Wolverine had used FIFO for all of its inventories.

4. In 2019, Wolverine reported a LIFO liquidation. Did this liquidation increase or decrease cost of goods sold in 2019? Does this indicate that inventory costs have been increasing or decreasing over time?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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