Chapter 10, Problem 10.5E

LIFO, Conversion to FIFO. Inventory transactions tor Jack Franklin stores are summarized in the following table. The company uses the LIFO perpetual method for both financial and tax reporting.

Transaction	Units	Sales in Units	Unit Cost	Total Cost
Beginning inventory: January 1
Oldest cost	2,000		$5	$ 10,000
N9xt oldest cost	1,750		8	14,000
Total beginning inventory	3,750			$ 24,000
Purchases
January 20	5,000		9	45,000
February 18	12,000		11	137,500
Subtotal	21,250			$206,500
Units sold on May 1 at $18		19,000
July 28	18,750		10	187,500
Total available for sale	40,000			$394,000
Total units sold	(19,000)
Ending inventory	21,000

The inventory footnote from Jack Franklin Stores annual report indicates that the difference between the LIFO costs and the current (FIFO) costs of inventory is equal to $0 and $12,750 at the beginning and end of the year respectively.

Required

1. a. Determine the ending inventory and cost of goods sold for the current year.
2. b. Use the footnote information provided in the question to convert the beginning and ending inventories from a LIFO to a FIFO basis.
3. c. Convert the cost of goods sold for the current year from the LIFO to the FIFO basis.
4. d. Compare the inventory turnover ratio for the current year computed under the two methods of inventory valuation.