Chapter 8, Problem 8.8BYP

Real World Case 8–8

Effects of inventory valuation methods; supplemental LIFO disclosures; Wolverine World Wide, Inc.

• LO8–4, LO8–6

Real World Financials

Income statement and balance sheet information abstracted from a recent annual report of Wolverine World Wide, Inc. appears below:

	Balance Sheets ($ in millions)
	January 2, 2016	January 3, 2015
Current assets:
Inventories	$466.6	$414.0
Income Statements ($ in millions)

	For the Year Ended
	January 2, 2016	January 3, 2015
Net sales	$2,691.6	$2,761.1
Cost of goods sold	1,636.9	1,673.8
Gross profit	$1,054.7	$1,087.3

The significant accounting policies note disclosure contained the following:

Inventories

The Company used the LIFO method to value inventories. If the FIFO method had been used, inventories would have been $27.0 million and $25.1 million higher than reported at January 2, 2016 and January 3, 2015, respectively.

Required:

1. Why is Wolverine disclosing the FIFO cost of its LIFO inventory?

2. Calculate what beginning inventory and ending inventory would have been for the year ended January 2, 2016, if Wolverine had used FIFO for all of its inventories.

3. Calculate what cost of goods sold would have been for the year ended January 2, 2016, if Wolverine had used FIFO for all of its inventories.