The following information can be found in ABC Co.'s financial statements. Finished goods Work-in-process and purchased parts Raw materials Total FIFO value Less excess of current cost over stated LIFO value Inventories Retained earnings 2006 $ 251,690 245,123 136,568 633,381 62,951 $570,430 $3,526,000 2005 $ 195,360 186,432 106,789 488,581 71,186 $ 417,395 $3,159,000 Assume a tax rate of 35%. Inventories valued using the LIFO method represented approximately 80% of consolidated inventories.
The following information can be found in ABC Co.'s financial statements. Finished goods Work-in-process and purchased parts Raw materials Total FIFO value Less excess of current cost over stated LIFO value Inventories Retained earnings 2006 $ 251,690 245,123 136,568 633,381 62,951 $570,430 $3,526,000 2005 $ 195,360 186,432 106,789 488,581 71,186 $ 417,395 $3,159,000 Assume a tax rate of 35%. Inventories valued using the LIFO method represented approximately 80% of consolidated inventories.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Use attachment to answer the following
What will be the value of inventory for 2006 if ABC used FIFO valuation?
a) $633,381
b) $570,430
c) $488,581
d) $633,485
Transcribed Image Text:The following information can be found in ABC Co.'s financial statements.
Finished goods
Work-in-process and
purchased parts
Raw materials
Total FIFO value
Less excess of current
cost over stated LIFO
value
Inventories
Retained earnings
2006
$ 251,690
245,123
136,568
633,381
62,951
$ 570,430
$3,526,000
2005
$ 195,360
186,432
106,789
488,581
71,186
$ 417,395
$3,159,000
Assume a tax rate of 35%. Inventories valued using the LIFO method represented approximately
80% of consolidated inventories.
Expert Solution
Step 1
According to Fifo method of inventory valuation the inventory which came first in store will be sold first. According to lifo method of inventory valuation the inventory came last in the store will be sold first.
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