FiFO and LIFO Inventory
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Wilmington Corporation reported the following in its 2009 annual report:
2008 2009
Inventories $ 87,200 $102,500
Accounts Payable $30,000 $38,800
Cost of products sold $300,000
Wilmington measures its inventory on a LIFO basis. The footnote relating to inventory stated "If inventories were valued on the FIFO basis, total inventories would have been $130,800 and $106,300 at December 31, 2009, and December 31, 2008 respectively." Assume that the cost of product sold relates entirely to items the company carries in its inventory.
Questions:
1. How much larger would ending inventory be under FIFO compared to LIFO at the end of 2008?
$...................
2. How much larger would ending inventory be under FIFO compared to LIFO at the end of 2009?
$...................
3. How much lower income did LIFO report for 2009 compared to income that would have been reported under FIFO? (Ignore Taxes)
$ ................
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Solution Summary
This solution illustrates how to compare the FIFO and LIFO values of inventory and the reported net income under each method. All steps are shown.
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1.How much larger would ending inventory be under FIFO compared to LIFO at the end of 2008?
Consider the following:
Inventory under FIFO at December 31, 2008 $106,300
Inventory under LIFO at December 31, 2008 $87,200
Excess of FIFO over LIFO $19,100
2.How much larger would ending inventory be ...
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