the financial statements also revealed that had gable been using lifo
The financial statements also revealed that had Gable been using LIFO, its cost of goods sold
would have been $1,865,000. The company's income taxes and payments amount to approximately
40 percent of income before taxes.
a. Explain how LIFO can result in a higher cost of goods sold. Would you expect LIFO to result
in a greater or lesser valuation of the company's ending inventories? Defend your answer.
b. Assuming that Gable had been using LIFO, compute the following amounts for the current
year. Show your supporting computations, with dollar amounts in thousands.
1. Income before taxes
2. Income taxes expense (which are assumed equal to income taxes actually paid)
3. Net income
4. Net cash provided by operating activities
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