Tyler Company Uses the Periodic Inventory System and Reported the Following

question 67

Essay

Tyler Company uses the periodic inventory system and reported the following summarized annual data at the end of 2022: $\begin{array}{lr}\text { Sales revenue } & \$ 1,000,000 \\\text { Cost of goods sold* } & 600,000 \\\text { Gross profit } & \$ 400,000 \\\end{array}$ *Based on an ending FIFO inventory of $240,000.
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 $150,000.
Instructions
(a) Restate the summary information on a LIFO basis.
(b) What effect, if any, would the proposed change have on Tyler's sales revenue and gross profit?
(c) If you were an owner of this business, what would your reaction be to this proposed change?

---

Definitions:

Constant Dividend

A dividend policy in which a firm aims to distribute a fixed amount or a stable dividend to shareholders per share, unaffected by fluctuations in its earnings or profits.

Required Rate of Return

The minimum expected rate of return on an investment, deemed necessary to compensate for its risk.

Annual Dividend

An annual dividend is the yearly sum paid by a corporation to its shareholders, representing a portion of the company's earnings distributed per share.

Rate of Return

Rate of return is the gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.