Bell \& Howell Company has diversified operations that include publishing, document/mail processing, information storage and retrieval, career education, and international marketing services. Its headquarters are located in Skokie, Illinois. The 1986 annual report of Bell \& Howell included the following footnote to its financial statements.

\section*{Note A-Significant Accounting Policies:}

Inventories. Inventories are valued at cost determined by the last-in, first-out (LIFO) and the first-in, first-out methods as follows: [Dollars in thousands]

Inventory cost includes material, labor, and overhead and is not in excess of market. The company uses the LIFO method of valuing substantially all domestic inventories. If the FIFO method had been used, the LIFO inventories would have been valued \(\$ 14,409\) and \(\$ 14,348\) higher at the end of 1986 and 1985, respectively.
Courtesy of Bell \& Howell Company.
Bell \& Howell Company reported a net income of \(\$ 32,895,000\) in 1986. Retained earnings on December 31, 1986, was \(\$ 244,071,000\). If Bell \& Howell had used FIFO for all of its inventories and the average income tax rate applicable to the company was 30 percent in all past years, what would have been reported as total inventories on December 31, 1986, and December 31, 1985? What would have been reported as 1986 net income? What would have been the balance of retained earnings on December 31, 1986?

Comment on Bell \& Howell's policy of using FIFO for some inventories and LIFO for other inventories. Is this practice acceptable in light of the consistency principle?

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Year-End LIFO FIFO 1986 1985 $84,890 97,498 $52,171 Total $137,061 41,042 138,540