The following information is taken from Satin financial statements (amounts in thousands) Inventory Footnote: If the first-in, first-out method of accounting for inventory had been used, inventory wou

The following information is taken from Satin financial statements (amounts in thousands) Inventory Footnote: If the first-in, first-out method of accounting for inventory had been used, inventory would have been approximately \$26.9 million and \$25.1 million higher than reported at 12/31/2010 and 12/31/2009, respectively. (ATTACHED DOC)

Required:

A) Calculate what inventory would have been at 12/31/2010 and 12/31/2009 had the FIFO inventory method been used.

B) What would cost of goods sold for the year ended 12/31/2010 have been if the FIFO inventory method been used? Show your computations.

C) Compute the inventory turnover ratio for 2010 using a LIFO cost-flow assumption.

D) Compute the inventory turnover ratio for 2010 using a FIFO cost-flow assumption.

E) Explain why the costs assigned to inventory under LIFO at the end of 2009 and 2010 are different than they are under FIFO.

ATTACHMENT PREVIEW

The following information is taken from Satin financial statements (amounts in
thousands
):
12/31/2010
12/31/2009
Inventory at LIFO
\$219,686
\$241,154
Cost of goods sold at LIFO
754,661
675,138
Stockholdersâ€™ Equity
242,503
242,712
Net Income
31,185
64,150
Tax rate
37%
37%
Inventory Footnote: If the first-in, first-out method of accounting for inventory had been used, inventory would
have been approximately \$26.9
million
and \$25.1
million
higher than reported at 12/31/2010 and 12/31/2009,
respectively.
Required:
A) Calculate what inventory would have been at 12/31/2010 and 12/31/2009 had the FIFO inventory
method been used.
B) What would cost of goods sold for the year ended 12/31/2010 have been if the FIFO inventory method
been used?
C) Compute the inventory turnover ratio for 2010 using a LIFO cost-flow assumption.
D) Compute the inventory turnover ratio for 2010 using a FIFO cost-flow assumption.
E) Explain why the costs assigned to inventory under LIFO at the end of 2009 and 2010 are different than
they are under FIFO.