Spando Apparel Uses the LIFO Inventory Method for External Reporting

question 49

Essay

Spando Apparel uses the LIFO inventory method for external reporting and for income tax purposes but maintains its internal records using FIFO. The following disclosure note was included in a recent annual report:
Inventories ($ in millions): The company's income statement reported cost of goods sold of $3,120 million for the fiscal year ended December 31, 2013.
Required:
1. Spando adjusts the LIFO reserve at the end of its fiscal year. Prepare the December 31, 2013, adjusting entry to record the cost of goods sold adjustment.
2. If Spando had used FIFO to value its inventories, what would cost of goods sold have been for the 2013 fiscal year?

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Definitions:

Packaging

The materials and methods used to protect, transport, and present goods for sale.

Thermometer Strip

A temperature-sensitive strip that displays the current temperature by changing color or revealing numerical values.

Southwestern Motif

A design theme characterized by features typical of the American Southwest, often including desert landscapes, native patterns, and warm, earthy colors.

Implementation Plan

A detailed outline of strategies, activities, timelines, and responsibilities to execute a project or strategy effectively.