Tyler Company Reported the Following Summarized Annual Data at the End

question 200

Essay

Tyler Company reported the following summarized annual data at the end of 2016: $\begin{array}{lr}\text { Sales revenue } & \$ 1,000,000 \\\text { Cost of goods sold }{ }^{*} & \underline{ 600,000} \\\text { Gross margin } & 400,000 \\\text { Operating expenses } & \underline{280,000} \\\text { Income before income taxes } & \$ 120,000\end{array}$

"Based on an ending FIFO inventory of $\$ 240,000$ .
The income tax rate is 30%. The controller of the company is considering a switch from FIFO to LIFO. He has determined that on a LIFO basis the ending inventory would have been $150000.
Instructions
(a) Restate the summary information on a LIFO basis.
(b) What effect if any would the proposed change have on Tyler's income tax expense net income and cash flows?
(c) If you were an owner of this business what would your reaction be to this proposed change?

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Definitions:

Maslow's Need Hierarchy

A theory in psychology that categorizes human needs into a hierarchical structure, from basic physiological needs to self-actualization.

McClelland's Theory

A psychological theory that categorizes human motivation into three types: the need for achievement, the need for affiliation, and the need for power.

Autonomy Support

Providing support for individuals to make their own choices and take initiative in their actions.

Self-Determination Theory

A psychological theory of motivation that emphasizes the role of intrinsic motivations and the need for autonomy, competence, and relatedness.