Answer the following questions regarding the following company by examining the

Question

Answer the following questions regarding the following company by examining the summary of significant policies:

https://www.sec.gov/cgi-bin/viewer?action=view&cik=86144&accession_number=0000086144-15-000004&xbrl_type=v#

Required:

1. If the company had used FIFO or FIFO approximation for all inventory, estimate what the beginning and ending inventory balances for the fiscal years reported, would have been if the company had used FIFO for all of its inventories.

2. Estimate the effect on cost of goods sold (that is, would it have been greater or less and by how much?) for the most recent fiscal year if the company had used FIFO for all of its inventories.

3. Would income from continuing operations, before taxes, have been materially different if the company had used inventory methods that approximated FIFO for all inventory? Express your answer as a percentage.

Explanation / Answer

1. The financial statements says

The remaining inventory consists primarily of perishables, pharmacy and fuel inventory.

are carried at the last purchased cost, which approximates FIFO cost

and inventories are carried at lower of LIFO cost or market.

since the LIFO cost is no materially different from the FIFO cost. the presented inventory amounts hold good for FIFO method as well.

Hence beginning balance for 2014= $1,643.2 million

ending balance for 2014= $1,755.3 million

2. There is no material effect on cost of goods sold

3. Income from continuing operations will not be materially different if the company had used FIFO method

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