Complete case study on Strength of Steel (Case 6-1) found on page 263 of Financial Reporting & Analysis by Gibson (2013):

https://books.google.com/books?id=IcEKAAAAQBAJ&pg=PA263&lpg=PA263&dq=ak+steel+holding+corporation+consolidated+balance+sheets+2010+10-k&source=bl&ots=AMw-dsQ7Le&sig=PDJj6KenzAfVUP7T-erH2UFRXec&hl=en&sa=X&ved=0ahUKEwibmKy6g8_QAhVqi1QKHWfFAcEQ6AEIMDAF#v=onepage&q=ak%20steel%20holding%20corporation%20consolidated%20balance%20sheets%202010%2010-k&f=false

Answer the following questions:

a. What is the working capital at the end of 2010?

b. What is the balance im the LIFO reserve account at the end of 2010? Describve this account.

c. If the LIFO reserve account was added to the inventory at LIFO, what would be the resulting inventory number at the end of 2010? Which inventory amount do you consider to be more realistic?

d. Does the use of LIFO or FIFO produce higher, lower, or the same income during (1) price increases; (2) price decreases; and (3) constant prices? (Assume no decrease or increae in inventory quantity).

e. Does the use of LIFO or FIFO produce higher, lower, or the same amount of cash flow during (1) price increases; (2) price decreases; and (3) constant costs? Answer the question for both pretax cash flows and after-tax cash flows. (Assume no decrease or increase in inventory quantity).

f. Assume that the company purchased inventory on the last day of the year, beginning inventiry equaled ending inventory, and inventory records for the item purchases were maintained periodically on the LIFO basis. Would that purchase be included on the income statement or the balance sheet at year-end?

g. Explain how liquidation of LIFO layers generates income.