Hi, I only need help with the sections highlighted in yellow and marked with a red "X".

 

Restating Inventory Values Using the LIFO Inventory Reserve.
Presented below are the condensed financial statements of Hawk Enterprises, Inc. The company's inventory is valued using LIFO. The company's footnotes reveal that the LIFO reserve was as follows.

Also, the footnotes indicate that net reductions in inventory levels resulted in a liquidation of LIFO layers amounting to $179,300 in Year 1 and $125,400 in Year 2.

 

Required
1. Restate the company's financial statements for Year 2 assuming: 1) the use of FIFO instead of LIFO 2) deferred income taxes is reported in current liabilities and 3) an effective tax rate of 33%.
Note: Round all entries to two decimal points. Use rounded amounts in any further calculations.

 

2. Answer the following questions to compare the tax consequences of using LIFO versus FIFO in Year 2, and for all prior years. (Assume an effective tax rate of 33%.)
Under normal conditions of increasing costs and stable (or growing) inventory levels, using FIFO instead of LIFO would lead to:

However, in Year 1, and again in Year 2, the company experienced a LIFO liquidation (the reason why is not clear).
Note: Round all entries to two decimal points. Use rounded amounts in any further calculations.