The Following Information Can Be Found in ABC Co Assume a Tax Rate of 35

The following information can be found in ABC Co.'s financial statements.
$\begin{array}{lrr}&\underline{ 2006}&\underline{ 2005}\\\text { Finished goods } & \$ 251,690 & \$ 195,360 \\\text { Work-in-process and } & & \\\text { purchased parts } & 245,123 & 186,432 \\\text { Raw materials } & 136,568 & 106,789 \\\text { Total FIFO value } & 633,381 & 488,581 \\\begin{array}{l}\text { Less excess of current } \\\text { cost over stated LIFO }\end{array} & & \\\text { value } &\underline{ 62,951}&\underline{71,186} \\\text { Inventories } & \$570,430&\$417,395\\\text { Retained earnings }&\$3,526,000&\$3,159,000\end{array}$
Assume a tax rate of 35%. Inventories valued using the LIFO method represented approximately 80% of consolidated inventories.
-What will be the retained earnings for 2005 if ABC used FIFO valuation?

A) $3,205,271
B) $3,566,918
C) $3,893,000
D) $4,096,430

Correct Answer:

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