Kroger reported net earnings of $1,728 million in its fiscal year 2014 income statement. Assuming a 35% tax rate, what amount of net earnings would Kroger report if the company used the FIFO inventory costing method?
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d. Kroger reported net earnings of $1,728 million in its fiscal year 2014 income statement. Assuming a 35% tax rate, what amount of net earnings would Kroger report if the company used the FIFO inventory costing method?
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- Dollar-Value LIFO Kwestel Company adopted the dollar-value LIFO method for inventory valuation at the beginning of 2015. The following information about the inventory at the end of each year is available from Kwestels records: Required: Calculate the dollar-value LIFO inventory at the end of each year. Round to the nearest dollar.Olson Company adopted the dollar-value LIFO method for inventory valuation at the beginning of 2015. The following information about the inventory at the end of each year is available from Olsons records: Required: 1. Calculate the dollar-value LIFO inventory at the end of each year. 2. Prepare the appropriate disclosures for the 2021 annual report if Olson uses current cost internally and LIFO for financial reporting.The following items were included in Venicio Corporations inventory account on December 31, 2019: What amount should Venicio report as inventory at December 31, 2019? a. 21,000 b. 20,400 c. 26,000 d. 35,000
- Inventory Write-Down The inventories of Berry Company for the years 2019 and 2020 are as follows: Berry uses a perpetual inventory system and the FIFO inventory cost flow assumption. Required: 1. Assume the inventory that existed at the end of 2019 was sold in 2020. Prepare the necessary journal entries at the end of each year to record the correct inventory valuation if Berry uses the: a. direct method b. allowance method 2. Next Level Explain any differences in inventory valuation and income between the two methods.Effects of an Inventory Error The income statements for Graul Corporation for the 3 years ending in 2019 appear below. During 2019, Graul discovered that the 2017 ending inventory had been misstated due to the following two transactions being recorded incorrectly. a. A purchase return of inventory costing $42,000 was recorded twice. b. A credit purchase of inventory' made on December 20 for $28,500 was not recorded. The goods were shipped F.O.B. shipping point and were shipped on December 22, 2017. Required: 1. Was ending inventory for 2017 overstated or understated? By how much? 2. Prepare correct income statements for all 3 years. 3. CONCEPTUAL CONNECTION Did the error in 2017 affect cumulative net income for the 3-year period? Explain your response. 4. CONCEPTUAL CONNECTION Why was the 2019 net income unaffected?Inventory Write-Down The inventory records of Frost Company for the years 2019 and 2020 reveal the cost and market of the January 1, 2019, inventory to be 125,000. On December 31, 2019, the cost of inventory was 130,000, while the market value was only 128,000. The December 31, 2020, market value of inventory was 140,000, and the cost was only 135,000. Frost uses a perpetual inventory system. Required: 1. Assume the inventory that existed at the end of 2019 was sold in 2020. Prepare the journal entries at the end of 2019 and 2020 to record the lower of cost or net realizable value under the: a. allowance method b. direct method 2. Show the presentation of cost of goods sold and inventory of Frosts income statement and balance sheet for 2019 and 2020 under the: a. allowance method (assume the cost of goods sold prior to applying the lower of cost or net realizable value rule was 595,000 and 605,000 for 2019 and 2020, respectively) b. direct method
- LIFO and Inventory Pools On January 1, 2016, Grover Company changed its inventory cost flow method to the LIFO cost method from the FIFO cost method for its raw materials inventory. It made the change for both financial statement and income tax reporting purposes. Grover uses the multiple-pools approach under which it groups substantially identical raw materials into LIFO inventory pools. It uses weighted average costs in valuing annual incremental layers. The composition of the December 31, 2018, inventory for the Class F inventory pool is as follows: Inventory transactions for the Class F inventory pool during 2019 were as follows: On March 2, 2019, 4,800 units were purchased at a unit cost of 13.50 for 64,800. On September 1, 2019, 7,200 units were purchased at a unit cost of 14.00 for 100,800. A total of 15,000 units were used for production during 2019. The following transactions for the Class F inventory pool took place during 2020: On January 11, 2020, 7,500 units were purchased at a unit cost of 14.50 for 108,750. On May 14, 2020, 5,500 units were purchased at a unit cost of 15.50 for 85,250. On December 29, 2020, 7,000 units were purchased at a unit cost of 16.00 for 112,000. A total of 16,000 units were used for production during 2020. Required: 1. Prepare a schedule to compute the inventory (units and dollar amounts) of the Class F inventory pool at December 31, 2019. Show supporting computations in good form. 2. Prepare a schedule to compute the cost of Class F raw materials used in production for the year ended December 31, 2019. 3. Prepare a schedule to compute the inventory (units and dollar amounts) of the Class F inventory pool at December 31, 2020. Show supporting computations in good form.Analyzing Inventory Disclosure Comparing LIFO & FIFOThe current asset section of the 2014 and 103 fiscal year end balance sheet of The Kroger Co are presented in the accompany tables: a. At what dollar amount does Kroger report its inventory in its Jan. 31, 205 balance sheet? b. What is the cumulative effect (through Jan. 31, 2015) of the use of LIFO on Kroger’s pretax earning? c. Assuming a 35% tax rate, what is the cumulative (through Jan. 31, 2015) tax effect of the use of LIFO to determine inventory costs?d. Kroger reported net earnings of $1,728 million in its fiscal year 2014 income statement. Assuming a 35% tax rate, what amount of net earnings would Kroger report if the company is using FIFO inventory costing methods?e. Kroger reported merchandise cost of $85,512 M in fiscal year 2014. Compute the inventory turnover for the year.f. How would the inventory turnover ratio differ if the FIFO costing method had been used? Current asset (in millions) Jan.…Restating Inventory Values Using the LIFO Inventory Reserve.Chemical Boost, Inc. is a manufacturer of chemical and derivative products. Presented below is selected information from Chemical Boost’s recent annual report. Chemical Boost, Inc. Condensed Balance Sheet ($ millions) 2015 2014 2015 2014 Assets Liabilities & Shareholders' Equity Inventory $3,250 $3,100 Liabilities $12,635 $12,260 Other current assets 6,780 6,950 Capital stock 3,730 3,590 Noncurrent assets 10,150 9,450 Retained earnings 3,815 3,650 Total $ 20,180 $ 19,500 Total $ 20,180 $ 19,500 Chemical Boost, Inc. Condensed Statement of Earnings ($ millions) 2015 2014 Revenues $ 20,285 $ 20,950 Cost of goods sold 13,825 14,120 Gross proft 6,460 6,830 Other expenses 5,880 6,213 Income taxes 150 310 Net earnings $ 430 $ 308 The footnotes to the company’s financial statements revealed that Chemical Boost, Inc. values most of its inventory using LIFO. The LIFO…
- Restating Inventory Values Using the LIFO Inventory Reserve.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 $ 19,500 $ 18,600 Liabilities $75,810 $73,560 Other current assets 40,680 41,700 Capital stock 22,380 21,540 Noncurrent assets 60,900 56,700 Retained earnings 22,890 21,900 Total $ 121,080 $ 117,000 Total $ 121,080 $ 117,000 Chemical Boost, Inc. Condensed Statement of Earnings ($ millions) 2015 2014 Revenues $ 121,710 $ 125,700 Cost of goods sold 82,950 84,720 Gross proft 38,760 40,980 Other expenses 35,280 37,275 Income taxes 900 1,860 Net earnings $ 2,580 $ 1,845 The footnotes to the company’s financial statements revealed that Chemical Boost, Inc. values most of its…Computing and Evaluating Inventory and PPE TurnoversIntel Corporation reports the following financial statement amounts in its 10‑K reports. Cost of Plant, Property and $ millions Sales Goods Sold Inventories Equipment, Net 2016 $71,264 $18,376 $5,553 $36,171 2017 75,313 18,822 6,983 41,109 2018 85,018 21,871 7,253 48,976 a. Compute the inventory and PPE turnover ratios for both 2017 and 2018.Note: Do not round until your final answer.Note: Round your final answers to one decimal place (for example, enter 6.8 for 6.77555). 2017 2018 Inventory turnover Answer Answer PPE turnover Answer Answer b. What changes are evident in the turnover rates of Intel for these years?Inventory turnover AnswerPPE turnover AnswerPreparation of Operating Activities Section—Indirect Method, Periodic Inventory) The income statement of Dunne Company is shown below.Dunne Company Income Statement For the Year Ended December 31, 2020Sales revenue $ 8,900,000 Cost of goods sold 5,700,000 Gross profit 3,200,000 Operating expenses Selling expenses 550,000 Administrative expenses 725,000 1,275,000 Net income 1,925,000 1. Accounts receivable increased 340,000 during the year2. Inventory decreased $200,000 during the year3. Prepaid expenses increased $150,000 during the year4. Accounts payable to suppliers decreased $310,000 during the year5. Accrued expenses payable increased $70,000 during the year6. Administrative expenses include depreciation expense of $60,000 Prepare the operating activities section of the statement of cash flows for the year ended Dec 31, 2020 for Dunne company, using the indirect method