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Kimball International Inc. uses the LIFO method of accounting for inventory. In its 2017 inventory footnote...

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Accounting

Kimball International Inc. uses the LIFO method of accountingfor inventory. In its 2017 inventory footnote Kimball reported aLIFO reserve of $19,500 and $21,100 at June 30, 2017 and 2016,respectively. Selected data from the financial statements is below2017 2016 Total inventory $89,489 $76,146 Net Sales 923,636 895,912Cost of Sales 664,311 645,591 Gross Profit 259,325 250,321 Earningsper Share $2.15 $1.96 a. Compute the inventory amount at June 30,2017 for Kimball International Inc. assuming that it had used theFIFO method of accounting for inventory. (3 points) b. DoesKimball’s use of LIFO rather than FIFO affect its cash flows?Explain briefly. (2 points) -- Font family --Andale MonoArialArialBlackBook AntiquaComic Sans MSCourierNewGeorgiaHelveticaImpactSymbolTahomaTerminalTimes NewRomanTrebuchet MSVerdanaWebdingsWingdings -- Font size --1 (8pt)2(10pt)3 (12pt)4 (14pt)5 (18pt)6 (24pt)7 (36pt)

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June 30, 2017 June 30, 2016
Inventory Balance Under LIFO Method $             89,489 $              76,146
LIFO Reserve (Add) $             19,500 $              21,100
Inventory Balance Under FIFO Method $          108,989 $              97,246
Does Kimball’s use of LIFO rather than FIFO affect its cash flows?
Yes, It does affect its cash flows. Because cost of goods sold under both method (FIFO and LIFO) are different. Hence, Income before tax will also different under both methods. So the amount of income tax should also different under both methods. Hence, tax payment affects the cash flow of the Kimball.

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