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The Following Information Can Be Found in Manufacturer Company's Financial

Question 56

Multiple Choice

The following information can be found in Manufacturer Company's financial statements. 2006‾2005‾ COGS $2,500,000$2,000,000 Inventory $180,000$140,000 Net income $125,000$100,000 Retained earnings $500,000$400,000 LIFO reserve $40,000$30,000 Tax rate 40%40%\begin{array}{llll}&\underline{2006}&\underline{2005}\\\text { COGS } & \$ 2,500,000 & \$ 2,000,000 \\\text { Inventory } & \$ 180,000 & \$ 140,000 \\\text { Net income } & \$ 125,000 & \$ 100,000 \\\text { Retained earnings } & \$ 500,000 & \$ 400,000 \\\text { LIFO reserve } & \$ 40,000 & \$ 30,000\\\text { Tax rate }&40\%&40\%\end{array}

-If Manufacturer used FIFO, its retained earnings as of the end of fiscal 2006 would be:


A) $540,000.
B) $440,000.
C) $524,000.
D) $506,000.

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