CFA Practice Question
The following information can be found in Manufacturer Company's financial statements.
| 2008 | 2007 | |
| COGS | $2,500,000 | $2,000,000 |
| Inventory | $180,000 | $140,000 |
| Net Income | $125,000 | $100,000 |
| Retained Earnings | $500,000 | $400,000 |
| LIFO Reserve | $40,000 | $30,000 |
| Tax Rate | 40% | 40% |
If Manufacturer used FIFO its Net Income for fiscal 2008 would be ______.
A. $149,000
B. $135,000
C. $131,000
Explanation: Back out the effect of the change in the LIFO reserve: $125,000 + ((40,000 - 30,000) * (1-40%)) = $131,000
User Contributed Comments 1
| User | Comment |
|---|---|
| manju79 | Expenses went down by 10,000 but saving is only 6000 as tax went up by 4000 |