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Exercise 8-18 Supplemental LIFO disclosures; LIFO reserve; Steelcase [LO8-6]

Exercise 8-18 Supplemental LIFO disclosures; LIFO reserve; Steelcase [LO8-6]

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Exercise 8-18 Supplemental LIFO disclosures; LIFO reserve; Steelcase [LO8-6]
Steelcase Inc. is the global leader in providing furniture for office environments. The company uses the LIFO inventory method for external reporting and for income tax purposes but maintains its internal records using FIFO. The following disclosure note was included in a recent annual report:
 
 
7. Inventories ($ in millions):

25-Feb-11

26-Feb-10

  Raw materials

64

50.3

  Work-in-process

14.8

12.8

  Finished goods

83.6

66.5

162.4

129.6

  LIFO reserve

-21.8

-23.1

140.6

106.5

 
           
 
The company's income statement reported cost of goods sold of $1,743.3 million for the fiscal year ended February 25, 2011.
 
Required:
1.        
Steelcase adjusts the LIFO reserve at the end of its fiscal year. Prepare the February 25, 2011, adjusting entry to make the cost of goods sold adjustment. (Enter your answers in millions, (i.e., 5,500,000 should be entered as 5.5). Round your answers to 1 decimal place. If no entry is required for a transaction, select "No journal entry required" in the first account field.)
             
     
 
2.        
If Steelcase had used FIFO to value its inventories, what would cost of goods sold have been for the 2011 fiscal year? (Enter your answer in millions rounded to 1 decimal place.)
             
     
 
3.        
Since its inception, what is the amount of income tax the company has saved by using LIFO instead of FIFO for tax purposes? Assume an effective income tax rate of 40%. (Enter your answer in millions rounded to 3 decimal places.)


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