Answer Happy

Note 1 -Surrimary of Signtficant Accounting Policlos R.E.C. Inc, is a rotuiler of recreational equipmont and clothing Consolidatort:"To connulidated financial statementx include the accounts and transactions of the company und it wholly owned subsidinries. The company accounts for ite investment in its subsidiaries using the equity mi thod of accounting. All significant intercompany trasuctions have been eliminated in consolidation Marketable Seourlis: Marketable securities consist of short-term, Interest-bearing securities Inventaries: laventaries are stated at the lower of cost-- Inst in, first out (LIFO) -- or market. If the first-In, first-out (PIFO) method of inventory accounting had been used. Inventories would have heen approx- mately $2,681,000 and $2,096,000 higher than reported at December 31, 2007 and 2006. Depreciation and Amortization: Property, plant and equipment is stated at cost. Dupreciation expertise is cnlculated principally by the straight-line method based on climaled useful lives of 3 to 10 years for equipment, 3 to 30 years for leaschold Improvements, and 40 years for bulldings. Estimated useful lives of leasehold improveinents represent the remaining term of the lause In efect at the time the improvements are made. Experises of New Slores: Expenses antelated with the opening of now stores are charged to expense as incurred. Other Assats: Other assets are investments in properties not used in business operations
2007 2006 $ 4,061 5,272 $ 2,382 8,004 Arrels Current Assets Cash Murkotablo securities (Note A) Accounts receivable, less allowance for doubtful counts of $448 ls 2007 and 5417 in 2006 Inventories (Nota A) Prepaid expenses "Total current ABC Property, Plunt, and Piquipment (Notos A.Cand B) Land Buildings and lonachold it provenant Equipment 8,960 47,041 S12 65,846 8,350 36,769 759 56,264 811 18.273 21.523 40,407 11.528 29.079 373 $95,298 811 15,928 13.768 26,507 7.530 18,977 008 $75,909 Les accumulated depreciation and aroctication Net property, plant, and equipment Other Assets (Note A) "Total Assets Liabilities and Stockholders' Equity Current Liabilities Accounts payable Notok payable-banks (Note B) Current maturitios of long-term debt (Note C) Acerued Klabilities Total current liabilities Deferred Federal Income Taxes (Notes A and D) Long-"Dorm Debt (Nata C) Commitments (Note E) Total liabilities Stockholders' Equly Common stock, por value $1, authorized, 10,000,000 sharon Issued, 4,803,000 shares in 2007 and 4,594,000 sharer in 2006 (Note F) Additional puid-in capital Relalul Burnings Total stockholders' oqulty Total Liabilities and Stockholders' Equity The socanpanying notes are an integral part of these statements $14,294 9.614 1.884 $.660 27,467 843 21.059 $ 7,591 6,012 1,516 5.313 20,432 635 16,975 49,363 38,042 4,803 957 40.175 45,035 $05,200 4,594 910 32,363 37.867 $25,909 С M
REC Flot Click on the link to REC's financials, or use your REC handout See Note about the LIFO Reserve Choose the answer the indicates the adjustment that would made to adus REC 2007 Be Sheet to compare to a company Pro Assume a 215 Statutory Tax Rate O None of the owers is correct Inventory increases 2.681.000 Datorredors Decreases $563, 010 Retained Eames increases by $2.117 000 Inventory Increases $2.601,000 Deferred to increases $563, 010 Retained Emings increases by $2.117.990 Inventory Decreases $2.681.000 Deferred Tax Decreases $563.010 Retained Earrings Decreases by 32 117990 Inventory Decreases $2.681.000 Deforred Taxes increases $503.010 Retained stes by 2.117.900
REC Financials of Using the LIFO Reserve, what would REC's after-tax net income be adjusted by in 2007 il adjusted to a comprabole FIFO basis? Assume a 21% Statutory Tax Rate Net Income would be adjusted down by $585,000 & Net Income would be adjusted up by $112,450 Net Income would be adjusted up by $462,150 Net Income would be adjusted down by $122 850 O None of the answers is correct