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Flounder Company is considering changing its inventory valuation method from FIFO to LIFO because of the potential tax savings. However, management wishes to consider all of the effects on the company, including its reported performance, before making the final decision. The inventory account, currently valued on the FIFO basis, consists of 1,000,000 units at $8 per unit on January 1, 2017. There are 1,000,000 shares of common stock outstanding as of January 1, 2017, and the cash balance is $418,720. The company has made the following forecasts for the period 20172019. 2017 2018 2019 Unit sales (in millions of units) 1.10 1.02 1.30 Sales price per unit $10 $12 $12 Unit purchases (in millions of units) 1.02 1.10 1.2 Purchase price per unit $8 $9 $10 Annual depreciation (in thousands of dollars) $300 $300 $300 Cash dividends per share $0.15 $0.15 $0.15 Cash payments for additions to and replacement of plant and equipment (in thousands of dollars) $350 $350 $350 Income tax rate 40% 40% 40% Operating expenses (exclusive of depreciation) as a percent of sales 15% 15% 15% Common shares outstanding (in millions) 1 1 1 (a) Compute the following data for Flounder Company under the FIFO and the LIFO inventory method for 20172019. Assume the company would begin LIFO at the beginning of 2017. (Enter amounts in thousands. Round earnings per share values to 2 decimal places, e.g. 52.75. Round other answers to 0 decimal places, e.g. 125.)

(1) Year-end inventory balances.

(2) Annual net income after taxes.

(3) Earnings per share.

(4) Cash balance. Assume all sales are collected in the year of sale and all purchases, operating expenses, and taxes are paid during the year incurred.

Year-end inventory balances 2017 2018 2019

FIFO $ $

$ LIFO $ $

$ Annual net income after taxes 2017 2018 2019

FIFO $ $

$ LIFO $ $ $

Earnings per share 2017 2018 2019

FIFO $ $

$ LIFO $ $ $

Cash balance 2017 2018 2019

FIFO $ $

$ LIFO $ $ $

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