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KW Steel Corp. uses the LIFO method of inventory valuation. Waretown Steel, KW's major competitor, instead uses the FIFO method. The following are excerpts from each company's 2017 financial statements: ($ in millions) Balance sheet inventories LIFO reserve Sales Cost of Goods sold KW Steel Corp. 2017 2016 Waretown Steel 2017 2016 $ 708.2 $ 688.6 3,584.2 3,355.8 $ 797.6 $ 692.7 378.0 334.9 4,284.8 4,029.7 3,427.8 3,226.5 2,724.0 2,617.5 Required: 1. Compute each company's 2017 gross margin percentage and inventory turnover using cost of goods sold as reported by each company. For each ratio, how does KW Steel compare to Waretown Steel? 2. Restate KW's cost of goods sold and inventory balances to the FIFO basis. On the basis of its adjusted data, recompute KW’s gross margin percentage and inventory turnover.

KW Steel Corp. uses the LIFO method of inventory valuation. Waretown Steel, KW's major competitor, instead uses the FIFO method. The following are excerpts from each company's 2017 financial statements: ($ in millions) Balance sheet inventories LIFO reserve Sales Cost of Goods sold KW Steel Corp. 2017 2016 Waretown Steel 2017 2016 $ 708.2 $ 688.6 3,584.2 3,355.8 $ 797.6 $ 692.7 378.0 334.9 4,284.8 4,029.7 3,427.8 3,226.5 2,724.0 2,617.5 Required: 1. Compute each company's 2017 gross margin percentage and inventory turnover using cost of goods sold as reported by each company. For each ratio, how does KW Steel compare to Waretown Steel? 2. Restate KW's cost of goods sold and inventory balances to the FIFO basis. On the basis of its adjusted data, recompute KW’s gross margin percentage and inventory turnover.

FINANCIAL ACCOUNTING
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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Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Restate KW's cost of goods sold and inventory balances to the FIFO basis. On the basis of its adjusted data, recompute KW's gross margin percentage and inventory turnover. (Round your answers to 1 decimal places.) KW Steel Corp. Waretown Steel Cost of goods sold (FIFO) S 900.1 × $ 860.2 x Gross margin rate 21.0 % 24.0 % Inventory turnover 3.1 3.9 < Required 1 Required 2 >
Transcribed Image Text:Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Restate KW's cost of goods sold and inventory balances to the FIFO basis. On the basis of its adjusted data, recompute KW's gross margin percentage and inventory turnover. (Round your answers to 1 decimal places.) KW Steel Corp. Waretown Steel Cost of goods sold (FIFO) S 900.1 × $ 860.2 x Gross margin rate 21.0 % 24.0 % Inventory turnover 3.1 3.9 < Required 1 Required 2 >
Excercise 9-12 Converting LIFO to FIFO (LO9-5) KW Steel Corp. uses the LIFO method of inventory valuation. Waretown Steel, KW's major competitor, instead uses the FIFO method. The following are excerpts from each company's 2017 financial statements: ($ in millions) Balance sheet inventories LIFO reserve Sales Cost of Goods sold KW Steel Corp. 2017 2016 $ 797.6 $ 692.7 378.0 4,284.8 3,427.8 334.9 4,029.7 3,226.5 Waretown Steel 2017 2016 $ 708.2 $ 688.6 3,584.2 3,355.8 2,724.0 2,617.5 Required: 1. Compute each company's 2017 gross margin percentage and inventory turnover using cost of goods sold as reported by each company. For each ratio, how does KW Steel compare to Waretown Steel? 2. Restate KW's cost of goods sold and inventory balances to the FIFO basis. On the basis of its adjusted data, recompute KW's gross margin percentage and inventory turnover.
Transcribed Image Text:Excercise 9-12 Converting LIFO to FIFO (LO9-5) KW Steel Corp. uses the LIFO method of inventory valuation. Waretown Steel, KW's major competitor, instead uses the FIFO method. The following are excerpts from each company's 2017 financial statements: ($ in millions) Balance sheet inventories LIFO reserve Sales Cost of Goods sold KW Steel Corp. 2017 2016 $ 797.6 $ 692.7 378.0 4,284.8 3,427.8 334.9 4,029.7 3,226.5 Waretown Steel 2017 2016 $ 708.2 $ 688.6 3,584.2 3,355.8 2,724.0 2,617.5 Required: 1. Compute each company's 2017 gross margin percentage and inventory turnover using cost of goods sold as reported by each company. For each ratio, how does KW Steel compare to Waretown Steel? 2. Restate KW's cost of goods sold and inventory balances to the FIFO basis. On the basis of its adjusted data, recompute KW's gross margin percentage and inventory turnover.
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