Excerpts from the annual report of Lands" End follow ($ in thousands):
|
|
Year 9
|
Year 8
|
|
Inventory
|
$219,686
|
$241,154
|
|
Cost of sales
|
754,661
|
675,138
|
|
Net income
|
31,185
|
64,150
|
|
Tax rate
|
37%
|
37%
|
Note 1: If the first-in, first-out (FIFO) method of accounting for inventory had been used, inventory would have been approximately $26.9 million and $25.1 million higher than reported at Year 9 and Year 8, respectively.
Required:
a. What would ending inventory have been at Year 9 and Year 8 had FIFO been used?
b. What would net income for the year ended Year 9 have been had FIFO been used?
c. Discuss the usefulness of LIFO to FIFO restatements for analysis purposes.