EFFECTS OF INVENTORY COSTING METHODS ON THE BALANCE SHEET. Berkshire Enterprises has used the weighted average costing
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EFFECTS OF INVENTORY COSTING METHODS ON THE BALANCE SHEET.
Berkshire Enterprises has used the weighted average costing method for its inventories for several years. At the end of 19x6 Berkshire’s accountant prepared the following balance sheet using weighted average inventory costing:
If Berkshire had used the LIFO rather than the weighted average method, the 19x6 cost of goods sold would have been larger and ending inventory smaller by $42,500.
Assume that Berkshire’s tax rate is 34% and that income taxes saved if the LIFO method is used would be used to reduce short-term notes payable.
REQUIRED:
Restate Berkshire’s balance sheet assuming that LIFO rather than weighted average is used for inventory costing.
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