Analyzing Inventories Using LIFO Inventory Disclosure Note The disclosure note below is from the financial statements of Michael's Merchants, Inc., an operator of convenience stores ( $ thousands). Inventories Inventories, which consist of merchandise and fuel, are stated at the lower of cost or market. For fuel, cost is determined through the use of the first-in, first-out (FIFO) method. For merchandise inventories, cost is determined through the use of the last-in, first-out (LIFO) method. The excess of replacement cost over the stated LIFO value was $74,414 and $68,692 at April 30, Year 2 and Year 1, respectively. There were no material LIFO liquidations during the period presented. Below is a summary of the inventory values at April 30, Year 2 and Year 1. In Year 2, Michael's Merchants reported sales revenue of $8,257.8 million and cost of goods sold of $5,976.0 million. a. Calculate the amount of inventories purchased by Michael's Merchants in Year 2. Round intermediate calculations and answers to one decimal place. \& million. b. What amount of gross profit would Michael's Merchants have reported if the FIFO method had been used to value all inventories in Year 2. Round intermediate calculations and answer to one decimal place. c. Calculate the gross profit margin (GPM) as reported and assuming that the FIFO method had been used to value all inventories. Round answers to two decimal places (i.e., 0.15785=15.79% ) As reported 3 Under FIFO % Analyzing Inventories Using LIFO Inventory Disclosure Note The disclosure note below is from the financial statements of Michael's Merchants, Inc., an operator of convenience stores ( $ thousands). Inventories Inventories, which consist of merchandise and fuel, are stated at the lower of cost or market. For fuel, cost is determined through the use of the first-in, first-out (FIFO) method. For merchandise inventories, cost is determined through the use of the last-in, first-out (LIFO) method. The excess of replacement cost over the stated LIFO value was $74,414 and $68,692 at April 30, Year 2 and Year 1, respectively. There were no material LIFO liquidations during the period presented. Below is a summary of the inventory values at April 30, Year 2 and Year 1. In Year 2, Michael's Merchants reported sales revenue of $8,257.8 million and cost of goods sold of $5,976.0 million. a. Calculate the amount of inventories purchased by Michael's Merchants in Year 2. Round intermediate calculations and answers to one decimal place. \& million. b. What amount of gross profit would Michael's Merchants have reported if the FIFO method had been used to value all inventories in Year 2. Round intermediate calculations and answer to one decimal place. c. Calculate the gross profit margin (GPM) as reported and assuming that the FIFO method had been used to value all inventories. Round answers to two decimal places (i.e., 0.15785=15.79% ) As reported 3 Under FIFO %
