1 The Finish Line Inc. reported the following items in its fiscal 2012 financial report (S in millions) 194 959 484 2012 2011 Sales $1,443 $1,369 Cost of goods sold: Beginning Inventory 220 Purchase 983 915 Goods Available for Sale 1203 1109 Less: Ending Inventory 244 220 Cost of goods sold 889 Gross Profit 480 Assume that counting errors caused the ending inventory in 2011 to be understated by $50 and the ending inventory in 2012 to be overstated by $50. a. Compute the impact of these errors on cost of goods sold for the year ending Dec 31, 2011, and on the inventory balance as of Dec 31, 2011. b. Compute the impact of these errors on cost of goods sold for the year ending Dec 31, 2012, and on the inventory balance as of Dec 31, 2012. 16 2 Heller Bottling Company began business in 2011, and ceased operations in 2015. Inventory units purchased and sold for the five years follow: Units Purchased Cost per Unit Units Sold 2011 10,000 12 5,000 2012 12,000 16,000 2013 5,000 18 2,000 2014 10,000 21 10,000 2015 2,000 23 6,000 a Compute cost of goods sold for each of the five years if the company uses the following: a. LIFO b. FIFO c. Average cost (round cost/unit to two decimals, and COGS to the nearest dollar) b. Does the choice of a cost flow assumption affect total net income over the life of a business? Explain. c. If the choice of a cost flow assumption does not affect net income over the life of a business, how does the choice of LIFO give rise to a tax benefit