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Analyzing Inventories with Quarterly Data and LIFO Liquidation The inventory footnote from The Dow Chemical Company's first quarter 2019 SEC report follows. The company
Analyzing Inventories with Quarterly Data and LIFO Liquidation The inventory footnote from The Dow Chemical Company's first quarter 2019 SEC report follows. The company also reports cost of goods sold for Q1 of 2019 of $10,707 million. Finished goods Inventories, in millions Mar. 31, 2019 Dec. 31, 2018 $5,703 $5,640 Work in process 2239 2,214 Raw materials 940 941 Supplies 891 880 Total 19,773 59,675 Adjustment of inventories to a LIFO basis (265) (415) Total Viventories $9,508 $9,200 Required a. What inventory costing method does Dow Chemical use? LIFO As of Q1 of 2019, what is the effect on cumulative pretax income and cash flow of using this inventory costing method, assuming a 30% average cumulative tax rate. Note: Do not use any negative signs with your answers Effect on pretax income (in millions) S 1 Effect on cash flows (in millions): s1 x Reduction x Increase v
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