Hall Inc. has beginning inventory of 100,000 units (cost of $15 per unit) accounted for using the LIFO inventory method. During the year, the company sold more items than purchased, causing the ending inventory balance to drop to 65,000 units. Assuming a tax rate of 25%, and a current replacement cost of inventory of $28 per unit, what is the LIFO liquidation effect on after-tax income? Select one: a. $341,250 b. $455,000
Hall Inc. has beginning inventory of 100,000 units (cost of $15 per unit) accounted for using the LIFO inventory method. During the year, the company sold more items than purchased, causing the ending inventory balance to drop to 65,000 units. Assuming a tax rate of 25%, and a current replacement cost of inventory of $28 per unit, what is the LIFO liquidation effect on after-tax income? Select one: a. $341,250 b. $455,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hall Inc. has beginning inventory of 100,000 units (cost of $15 per unit) accounted for using the LIFO inventory method. During
the year, the company sold more items than purchased, causing the ending inventory balance to drop to 65,000 units.
Assuming a tax rate of 25%, and a current replacement cost of inventory of $28 per unit, what is the LIFO liquidation effect on
after-tax income?
Select one:
a. $341,250
b. $455,000
c. $633,750
d. $113,750
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