Help... L1 FRS LIFO FIFO Question.. reserve, current, previous, following

leekeewen

 Given the following inventory information about the Buckner Company:

Year-end last in, first out (LIFO) inventory of $6,500.
Year-end LIFO reserve of $2,500.
The current year's LIFO cost of goods sold (COGS) is $15,000.
After tax income is $1,600.
The previous year's LIFO reserve was $2,000.

How much higher would the firm's retained earnings be on a first in, first out (FIFO) basis if the firm's tax rate is 40%?

A) $2,100.

B) $1,500.

C) $1,800.

ringthomas2008

 不确定。。。我猜的话选C， 感觉是   1600+(2500-2000)*40%=1800
不过要我自己算的话，我觉得是 1600+（2500-2000）*(1-40%)=1900

leekeewen

 The answer is B...

leekeewen

I got the same answer 1900....

ringthomas2008

B?? 这堆数字看上去怎么也凑不出B么，答案没解释吗?
呼唤达人

Signorino

答案应该是B
2500*（1-40%）=1500

bartzzr

我算出来应该是300.它不是问的是higher么~1900-1600=300~晕了

ringthomas2008

 这2500*(1-40%)怎么来的啊？
不能是直接用LIFO reserve的2500直接去乘吧？？

leekeewen

 2500*（1-40%）=1500....that's the correct answer..

But I don't know why...

zyystein

notes book 3 p152.

 

主要是讲LIFO convert FIFO的时候，balance  sheet要平衡，convert balance sheet FIFO，assets （inventory）增加2500；liability（tax）增加1000（2500×40%）；shareholder's equity (retained earning) 增加1500（2500×（1-40%））。