The following information is taken from Satin financial statements (amounts in thousands):

Inventory Footnote: If the first-in, first-out method of accounting for inventory had been used, inventory would have been approximately $26.9 million and $25.1 million higher than reported at 12/31/2010 and 12/31/2009, respectively.

Required:

A) Calculate what inventory would have been at 12/31/2010 and 12/31/2009 had the FIFO inventory method been used.
B) What would cost of goods sold for the year ended 12/31/2010 have been if the FIFO inventory method been used? Show your computations.
C) Compute the inventory turnover ratio for 2010 using a LIFO cost-flow assumption.
D) Compute the inventory turnover ratio for 2010 using a FIFO cost-flow assumption. 
E) Explain why the costs assigned to inventory under LIFO at the end of 2009 and 2010 are different than they are under FIFO.

Transcribed Image Text:

12/31/2010 12/31/2009 S219,686S241,154 754,661 675,138 242,503242,712 64.150 37% Inventory at LIFO Cost of goods sold at LIFO Stockholders Equity 31,185 37% Net Income Tax rate