Spando Apparel uses the LIFO inventory method for external reporting and for income tax purposes but maintains
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Question:
Spando Apparel uses the LIFO inventory method for external reporting and for income tax purposes but maintains its internal records using FIFO. The following disclosure note was included in a recent annual report:
Inventories ($ in millions):
2021 | 2020 | |||||||
Total inventories | $ | 649 | $ | 628 | ||||
LIFO reserve | (99 | ) | (59 | ) | ||||
$ | 550 | $ | 569 | |||||
The company’s income statement reported cost of goods sold of $3,200 million for the fiscal year ended December 31, 2021.
Required:
1. Spando adjusts the LIFO reserve at the end of its fiscal year. Prepare the December 31, 2021, adjusting entry to record the cost of goods sold adjustment.
2. If Spando had used FIFO to value its inventories, what would cost of goods sold have been for the 2021 fiscal year?
Related Book For
College Accounting Chapters 1-30
ISBN: 978-0077862398
14th edition
Authors: John Price, M. David Haddock, Michael Farina
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