Oshkosh B'Gosh, Inc., uses LIFO, Recent financial statements included the following daia (dal lars in thousands): $ 81,554 Average inventory (throughout the year) Current assets (at year-end) Current Habilities (at year-end) Net sales. Cost of goods sold... Gross profit ... . 115.852 ... . 27.175 ..... 315,076 209,006 ... 106.070 A note accompanying these statements indicated that had the company used the FIFO inventory method (dollars in thousands): 1. Average inventory would have been $88,474 (S6,920 higher than the LIFO amount). 2. Ending inventory would have been valued at a cost of $96,115 ($6,781 higher than the LIFO cost). 3. The cost cf goods,sold would have been $209,284 ($278 higher than that reported in the com- pany's income statement). Instructions & Using the data contained in the company's financial statements (based on the LIFO method), compute the following analytical measurements. (Round to the nearest tenth.) 1. Inventory tumover rate 2. Current ratio 3. Gross profit rate Recompute the three ratios required in part a in a manner that will be directly comparable o those of a company using the FIFO method in its financial statements. (Round to the nearsat tenth.) Notice that the cost of goods sold is higher under FIFO than LIFO. What circumstances eat the company have encountered to cause this somewhat unusual situation?
Oshkosh B'Gosh, Inc., uses LIFO, Recent financial statements included the following daia (dal lars in thousands): $ 81,554 Average inventory (throughout the year) Current assets (at year-end) Current Habilities (at year-end) Net sales. Cost of goods sold... Gross profit ... . 115.852 ... . 27.175 ..... 315,076 209,006 ... 106.070 A note accompanying these statements indicated that had the company used the FIFO inventory method (dollars in thousands): 1. Average inventory would have been $88,474 (S6,920 higher than the LIFO amount). 2. Ending inventory would have been valued at a cost of $96,115 ($6,781 higher than the LIFO cost). 3. The cost cf goods,sold would have been $209,284 ($278 higher than that reported in the com- pany's income statement). Instructions & Using the data contained in the company's financial statements (based on the LIFO method), compute the following analytical measurements. (Round to the nearest tenth.) 1. Inventory tumover rate 2. Current ratio 3. Gross profit rate Recompute the three ratios required in part a in a manner that will be directly comparable o those of a company using the FIFO method in its financial statements. (Round to the nearsat tenth.) Notice that the cost of goods sold is higher under FIFO than LIFO. What circumstances eat the company have encountered to cause this somewhat unusual situation?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Topic Video
Question
Transcribed Image Text:Oshkosh B'Gosh, Inc., uses LIFO. Recent financial statements included the following data (del
lars in thousands):
PROBLEM 8.12
What If They'd Used FIFO?
LO 1,7
$ 81,554
Average inventory (throughout the year)
Current assets (at year-end)
Current Habilities (at year-end)
115.852
27,175
315.076
Net sales
209,006
Cost of goods sold
Gross profit
106,070
A note accompanying these statements indicated that had the company used the FIFO inventorry
method (dollars in thousands):
1. Average inventory would have been $88,474 (S6,920 higher than the LIFO amount).
2. Ending inventory would have been valued at a cost of $96,115 ($6,781 higher than the LIFO
cost).
3. The cost cf goods,sold would have been $209,284 ($278 higher than that reported in the com-
pany's income statement).
Instructions
& Using the data contained in the company's financial statements (based on the LIFO method),
compute the following analytical measurements. (Round to the nearest tenth.)
1. Inventory tumover rate
2. Current ratio
3. Gross profit rate
b. Recompute the three ratios required in part a in a manner that will be directly comparable to
those of a company using the FIFO method in its financial statements. (Round to the nearsa
tenth.)
C. Notice that the cost of goods sold is higher under FIFO than LIFO. What circumstances mus
the company have encountered to cause this somewhat unusual situation?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education