BigBook.Com uses LIFO inventory accounting. Notes to BigBook.Com?s year 9 financial statements disclose the following (it has a marginal tax rate of 35%):

Required :

a. Determine the amount by which year 9 retained earnings of BigBook.Com changes if FIFO is used.

b. Determine the amount by which Year 9 net income of BigBook.Com changes if FIFO is used for both Years 8 and 9.

c. Discuss the usefulness of LIFO to FIFO restatements in an analysis of BigBook.Com.

Transcribed Image Text:

Year 8 $392,,675 401,342 794,017 Less LIFO reserve (46,000) Inventories Raw arterials Finished products Year 9 $369,725 377,104 746,829 (50,000) $748,017 $696,829 Year 8 $392,,675 401,342 794,017 Less LIFO reserve (46,000) Inventories Raw arterials Finished products Year 9 $369,725 377,104 746,829 (50,000) $748,017 $696,829

Answer rating: 100% (QA)

Last infirst out LIFO is an inventory method which says that sell the recently produced or purchased ... View the full answer