Patch Grove Nursery uses the LIFO inventory accounting method. Maria Huff, president, wants to determine the financial statement impact of changing to the FIFO accounting method. Select company information follows: Year-end inventory$ 22000 Year-end LIFO reserve $ 4000 Beginning of year LIFO reserve $ 3000 LIFO cost of goods sold $1800 After-tax income $ 2000 Tax rate 40% Under FIFO, the nursery’s ending inventory and after-tax profit would be: FIFO ending inventoryFIFO after-tax profit ①A.$18000$1400 ②B.$18000$ 2600 ③C.$ 26000$ 2600
A．
| A. ① |
B．
| B. ② |
C．
| C. ③ |
参考答案：C
解析：FIFO ending inventory = FIFO INV = LIFO INV + LIFO reserve = 22000 + 4000 = $ 26000 ; FIFO after-tax profit = LIFO after-tax profit + (change in LIFO reserve ) ( 1 - t) = $ 2000 + ( $4000- $3000)×(1 -0.4) = $2000+ $600= $2600.