E6-29. Adjusting Balance Sheet and Income Statement for LIFO to FIFO ANALYST ADJUSTMENTS 6.1 In its December 2019 10-K, Phillips 66 reported the following information ($ millions). 2019 Assets 2019 Inventories 2019 LIFO Reserve 2018 LIFO Reserve Tax Rate LO2 PHILLI (PS: $58,720 $3,776 $4,300 $2,900 22% a. Determine the necessary adjustments to the following balance sheet line items for 2019. ii. Total assets iv. Equity i. Inventories iii. Tax liabilities b. Determine the necessary adjustments to the following income statement line items for 2019. i. Cost of goods sold ii. Pretax income iii. Income tax expense iv. Net income E6-30. c. Compute the common-size inventories with LIFO and with FIFO for 2019. (Hint: Compute inventory as percent of total assets.) Do we believe the difference is material? Explain. Calculating Inventory Ratios for LIFO versus FIFO ANALYST ADJUSTMENTS 6.1 Refer to the information for Phillips 66 in E6-29 along with the following information ($ millions). LO2, 3 PHILLI (PS 2018 Assets 2019 Revenue 2018 Inventories 2019 Cost of Goods Sold 2019 Net Income $54,302 $102,354 $3,543 $79,409 $5,248 a. Recast inventories and cost of goods sold using FIFO for 2019. b. Compute the following ratios for 2019, under both LIFO and FIFO. Comment on whether they differ materially. i. Gross margin percentage ii. Days inventory outstanding (DIO) iii. Return on assets (ROA)