Document1 Word Kerem Lopez -? File Home InsertDraw Design Layout References Mailings Review View Help Tell me what you want to do CA8-10 WRITING (FIFO and LIFO) Harrisburg Company is considering changing its inventory valuation method from FIFO to LIFO because of the potential tax savings. However, management wishes to consider all of the effects on the company, including its reported performance, before making the final decision. The inventory account, currently valued on the FIFO basis, consists of 1,000,ooo units at $8 per unit on January 1, 2017. There are 1,000,000 shares of common stock outstanding as of January 1, 2017, and the cash balance is $400,000 The company has made the following forecasts for the period 2017-201 2017 2018 2019 1.1 1.0 1.3 $10 $12 $12 1.0 1.1 1.2 $8 $9 $10 $300 $300 $300 $0.15 $0.15 $0.15 $350 $350 $350 Unit sales (in millions of units) Sales price per unit Unit purchases in millions of units) hase price per unit Annual depreciation in thousands of dollars) Cash dividends per share Cash payments for additions to and replacement of plant and equipment (in thousands of dollars) Income tax rate Operating expenses(exclusive of depreciation) as a percent ofsales Common shares outstanding (in millions) Instructions 40% |40% |40% 15% 15% 15% (a)Prepare a schedule that illustrates and compares the following data for Harrisburg Company under the FIFO and the LIFO inventory method for 2017- 2019. Assume the company would begin LIFO at the beginning of 2017 Kerem Lopez (1)Year-end inventory balances. (2)Annual net income after taxes. (3) Earnings per share. (4)Cash balance Assume all sales are collected in the year of sale and all purchases, operating expenses, and taxes are paid during the year incurred. (b)Using the data above, your answer to (a), and any additional issues you believe need to be considered, prepare a report that recommends whether or not Harrisburg Company should change to the LIFO inventory method. Support your conclusions with appropriate arguments. Kerem Lopez Page 1 of 1 310 wors E English (United States) + 100%