Chapter 8, Problem 8.18E

Supplemental LIFO disclosures; LIFO reserve; AEP Industries

• LO8–6

Real World Financials

AEP Industries Inc. is a leading manufacturer of plastic packing films. The company uses the LIFO inventory method for external reporting but maintains its internal records using FIFO. The following disclosure note was included in a recent quarterly report:

4. Inventories (in part)

Inventories are comprised of the following ($ in thousands):

	January 31, 2016	October 31, 2015
Raw materials	$ 42,881	$ 47,593
Finished goods	71,547	66,484
Supplies	5,240	5,280
	119,668	119,357
Less: LIFO reserve	(13,655)	(18,093)
Inventories (under LIFO)	$106,013	$101,264

The company’s income statements reported cost of goods sold of $209,826 thousand for the quarter ended January 31, 2016.

Required:

1. Assume that AEP adjusts the LIFO reserve at the end of its quarter. Prepare the January 31, 2016, adjusting entry to record the cost of goods sold adjustment.

2. If AEP had used FIFO to value its inventories, what would cost of goods sold have been for the quarter ended January 31, 2016?