Refer to Table 9 3 The lower of cost or market for product N is a 20 b 22 c 24

Refer to table 9 3 the lower of cost or market for

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65 Refer to Table 9-3. The lower of cost or market for product N is a. $20. b. $22. c. $24. d. $28. 66 Refer to Table 9-3. The lower of cost or market for item M is 67 Refer to Table 9-3. The “market” value for item N is 68 ABC Company has elected to adopt the dollar-value LIFO inventory method when the inventory is valued at $125,000. The adoption takes place as of Janu-ary 1, 2005 when the entire inventory represents a single pool. ABC Company determined that the inventory at December 31, 2005 was $144,375 at current year cost and $131,250 at base year cost using a relevant price index of 1.10. The inventory at December 31, 2005 under dollar value LIFO is Table 9-4 The Shill Company uses the dollar-value LIFO method for valuing inventory. The following inventory information is available at the year end: Year Year End Price Price Index 1 $200,000 100 2 250,000 105 3 296,000 108 4 286,000 110 69 Refer to Table 9-4. The inventory at the end of Year 2 under dollar-value LIFO is a. $238,095. b. $240,000. c. $250,000. d. $262,500. 70 Refer to Table 9-4. The inventory under dollar-value LIFO at the end of Year 3 is 71 Refer to Table 9-4. The inventory under dollar-value LIFO at the end of Year 4 is 72 LIFO layers are more likely to be liquidated when inventory records are kept on 73 Refer to the excerpts of the 1996 Olin Corporation Annual Report on the follow-ing pages. All questions relate to 1996 unless stated otherwise. Assume a 35% corporate tax rate where necessary. Required: 1 What amount of inventory is on the balance sheet? 050609 5 09-Inventories.doc
2 Compute Olin’s cost of goods sold using FIFO instead of LIFO. 3 Compute the amount of the cumulative tax deferral resulting from LIFO exist-ing at the end of 1996. 4 Compute how being on LIFO affects Olin’s book value (common stockholders’ equity) at the end of 1996. 5 Compute the inventory turnover ratio to approximate physical unit flow for 1996. Olin Corporation Consolidated Statements Of Income Years ended December 31 ($ in millions, except per share data) 1996 1995 1994SALES $ 2,638 $ 2,665 $ 2,268 OPERATING EXPENSES: Cost of Goods Sold 2,021 2,115 1,844 Selling and Administration 319 293 Research and Development 39 34 OPERATING INCOME 259 223 Interest Expense 29 35 Interest and Other Income 216 16 INCOME FROM CONTINUING OPERATIONS BEFORE TAXES 446 204 Income Taxes 158 70 Income from Continuing Operations 288 134 Income (Loss) from Discontinued Operations, Net of Taxes (8) 6 NET INCOME 280 140 Preferred Dividends 4 6 Net Income Available To Common Shareholders $ 276 $ 134 $ 84 256 30 138 28 9 119 40 79 12 91 7 .26

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