Kimball International Inc. uses the LIFO method of

Kimball International Inc. uses the LIFO method of

Subject: Business    / Accounting
Question

Kimball International Inc. uses the LIFO method of accounting for inventory. In its 2012 inventory footnote Kimball reported a LIFO reserve of $19,500 and $21,100 at June 30, 2012 and 2011, respectively.

Selected data from the financial statements is below

2012

2011

Total inventory

$89,489

$76,146

Net Sales

923,636

895,912

Cost of Sales

664,311

645,591

Gross Profit

259,325

250,321

Earnings per Share

$2.15

$1.96

a. Compute the inventory amount at June 30, 2012 for Kimball International Inc. assuming that it had used the FIFO method of accounting for inventory. (3 points)

b. Does Kimball’s use of LIFO rather than FIFO affect its cash flows? Explain briefly. (2 points)