### Analysis for Displays Incorporated:#### Requirement:Using the information from the requirements above, complete the 'Analysis'. *(Calculate the ratios to the nearest 1 decimal place.)*#### Analysis Tasks:(a) **Calculate the LIFO reserve:**- **Scenario:** Displays Incorporated decided to maintain its internal records using FIFO but to use LIFO for external reporting. Assuming the ending balance of inventory under LIFO would have been $114,000, calculate the LIFO reserve. - **LIFO reserve is:** - [Space for calculation](b) **Calculate the ending inventory using dollar-value LIFO:**- **Scenario:** Assume Displays Incorporated's $77,000 beginning balance of inventory comes from the base year with a cost index of 1.00. The cost index at the end of 2021 is 1.1. Calculate the amount the company would report for inventory using dollar-value LIFO. - **Ending inventory using dollar-value LIFO:** - [Space for calculation](c) **Determine impact of LIFO on financial ratios:**- **Instruction:** Indicate whether each of the amounts below would be higher or lower when reporting inventory using LIFO (or dollar-value LIFO) instead of FIFO in periods of rising inventory costs and stable inventory quantities. 1. **Inventory turnover ratio** - [Space for indication] 2. **Average days in inventory** - [Space for indication] 3. **Gross profit ratio** - [Space for indication]#### Navigation:- Options to proceed to the balance sheet or continue with analysis are available.##### Note:Please fill in the calculations and indicators as per the analysis requirement for a comprehensive understanding. On January 1, 2021, Displays Incorporated had the following account balances:| Accounts | Debit ($) | Credit ($) ||---------------------------------------|-----------|-------------|| Cash | 41,000 | || Accounts receivable | 38,000 | || Supplies | 44,000 | || Inventory | 77,000 | || Land | 246,000 | || Accounts payable | | 56,000 || Notes payable (5%, due next year) | | 39,000 || Common stock | | 205,000 || Retained earnings | | 146,000 || **Totals** | 446,000 | 446,000 |From January 1 to December 31, the following summary transactions occurred:a. Purchased inventory on account for $349,000. b. Sold inventory on account for $665,000. The cost of the inventory sold was $329,000. c. Received $594,000 from customers on accounts receivable. d. Paid freight on inventory received, $43,000. e. Paid $339,000 to inventory suppliers on accounts payable of $347,000. The difference reflects purchase discounts of $8,000. f. Paid rent for the current year, $61,000. The payment was recorded to Rent Expense. g. Paid salaries for the current year, $169,000. The payment was recorded to Salaries Expense. Year-end adjusting entries:a. Supplies on hand at the end of the year are $8,000. b. Accrued interest expense on notes payable for the year. c. Accrued income taxes at the end of December are $37,000.

The dollar- value method of valuing LIFO inventories is a method of determining cost by using base…

sing the information from the requirements above, complete the 'Analysis'. (Calculate the ratios to the nearest 1 decimal lace.) Analyze the following for Displays Incorporated: Suppose Displays Incorporated decided to maintain its internal records using FIFO but to use LIFO for external reporting. Assuming e ending balance of inventory under LIFO would have been $114,000, calculate the LIFO reserve. FO reserve is: Assume Displays Incorporated $77,000 beginning balance of inventory comes from the base year with a cost index of 1.00. The st index at the end of 2021 of 1.1. Calculate the amount the company would report for inventory using dollar-value LIFO. ding inventory using dollar-value LIFO: Indicate whether each of the amounts below would be higher or lower when reporting inventory using LIFO (or dollar-value LIFO) stead of FIFO in periods of rising inventory costs and stable inventory quantities. Inventory turnover ratio Average days in inventory Gross profit ratio < Balance Sheet Analysis >

sing the information from the requirements above, complete the 'Analysis'. (Calculate the ratios to the nearest 1 decimal lace.) Analyze the following for Displays Incorporated: Suppose Displays Incorporated decided to maintain its internal records using FIFO but to use LIFO for external reporting. Assuming e ending balance of inventory under LIFO would have been $114,000, calculate the LIFO reserve. FO reserve is: Assume Displays Incorporated $77,000 beginning balance of inventory comes from the base year with a cost index of 1.00. The st index at the end of 2021 of 1.1. Calculate the amount the company would report for inventory using dollar-value LIFO. ding inventory using dollar-value LIFO: Indicate whether each of the amounts below would be higher or lower when reporting inventory using LIFO (or dollar-value LIFO) stead of FIFO in periods of rising inventory costs and stable inventory quantities. Inventory turnover ratio Average days in inventory Gross profit ratio < Balance Sheet Analysis >

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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Mercury Company has only one inventory pool. On December 31, 2024, Mercury adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO method was $204,000. Inventory data are as follows: Year Ending Inventory at Year-End Costs Ending Inventory at Base Year Costs 2025 $ 239,400 $ 228,000 2026 312,800 272,000 2027 314,400 262,000 Required: Compute the inventory at December 31, 2025, 2026, and 2027, using the dollar-value LIFO method. Note: Round "Year end cost index" to 2 decimal places.