Chemical Boost, Inc. is a manufacturer of chemical and derivative products. Presented below is selected information from Chemical Boost’s recent annual report. Chemical Boost, Inc. Condensed Balance Sheet ($ millions) 2015
Chemical Boost, Inc. is a manufacturer of chemical and derivative products. Presented below is selected information from Chemical Boost’s recent annual report.
| Chemical Boost, Inc. | |||||
|---|---|---|---|---|---|
| Condensed Balance Sheet | |||||
| ($ millions) | 2015 | 2014 | 2015 | 2014 | |
| Assets | Liabilities & Shareholders' Equity | ||||
| Inventory | $ 6,500 | $ 6,200 | Liabilities | $25,270 | $24,520 |
| Other current assets | 13,560 | 13,900 | Capital stock | 7,460 | 7,180 |
| Noncurrent assets | 20,300 | 18,900 | 7,630 | 7,300 | |
| Total | $ 40,360 | $ 39,000 | Total | $ 40,360 | $ 39,000 |
| Chemical Boost, Inc. | ||
|---|---|---|
| Condensed Statement of Earnings | ||
| ($ millions) | 2015 | 2014 |
| Revenues | $ 40,570 | $ 41,900 |
| Cost of goods sold | 27,650 | 28,240 |
| Gross proft | 12,920 | 13,660 |
| Other expenses | 11,760 | 12,425 |
| Income taxes | 300 | 620 |
| Net earnings | $ 860 | $615 |
The footnotes to the company’s financial statements revealed that Chemical Boost, Inc. values most of its inventory using LIFO. The LIFO reserve was approximately $600 million and $300 million, respectively, at year-end 2015 and 2014. Assume an effective tax rate of 26%.
1. If Chemical Boost, Inc. had used FIFO instead of LIFO to value its inventory, what value would have been reported for 2015 for the following accounts?
Enter answers in millions. Round to the nearest million, if needed.
a. Ending inventory $Answer million
b. Cost of goods sold $Answer million
c. Net income before $Answer million
d. Retained earnings $Answer million
2. How much additional income tax would the company have paid if it had used FIFO instead of LIFO to value its inventory?
Round to the nearest millions.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
