EXERCISE 4–1 Excerpts from the annual report of Lands’ End follow ($ in thousands):

Year 9 Year 8 Inventory................. $219,686 $241,154 Cost of sales........... 754,661 675,138 Net income ............. 31,185 64,150 Tax rate................... 37% 37%

Note 1: If the first-in, first-out (FIFO) method of accounting for inventory had been used, inventory would have been approximately $26.9 million and $25.1 million higher than reported at Year 9 and Year 8, respectively.

Required:

a. What would ending inventory have been at Year 9 and Year 8 had FIFO been used?

b. What would net income for the year ended Year 9 have been had FIFO been used?

c. Discuss the usefulness of LIFO to FIFO restatements for analysis purposes.