Part A: Calculating the Amount of Inventories Purchased by Casey's General Stores in 2020

To calculate the amount of inventories purchased, we can use the inventory equation for cost of goods sold (COGS):

$\text{COGS} = \text{Beginning Inventory} + \text{Purchases} - \text{Ending Inventory}$

We are given the following data### Part A: Calculating the Amount of Inventories Purchased by Casey's General Stores in 2020

To calculate the amount of inventories purchased, we can use the inventory equation for cost of goods sold (COGS):

$\text{COGS} = \text{Beginning Inventory} + \text{Purchases} - \text{Ending Inventory}$

We are given the following

• Beginning Inventory (2019) = $273,040 thousand
• Ending Inventory (2020) = $236,007 thousand
• COGS = $7,030,600 thousand

Rearranging the equation to solve for Purchases:

$\text{Purchases} = \text{COGS} + \text{Ending Inventory} - \text{Beginning Inventory}$

Substituting the given values:

$\text{Purchases} = 7,030,600 + 236,007 - 273,040$

Let's compute this value.

The amount of inventories purchased by Casey's General Stores in 2020 was $6,993.6 million.

Part B: Calculating Gross Profit if FIFO Had Been Used for All Inventories

The LIFO reserve (the excess of replacement cost over the LIFO value) was:

• $87,546 thousand in 2020
• $80,814 thousand in 2019

To adjust for the gross profit using FIFO for all inventories, we need to add the change in the LIFO reserve to the reported cost of goods sold (COGS).

$\text{COGS under FIFO} = \text{COGS under LIFO} - (\text{LIFO Reserve in 2020} - \text{LIFO Reserve in 2019})$

The gross profit under FIFO would then be:

$\text{Gross Profit under FIFO} = \text{Sales Revenue} - \text{COGS under FIFO}$

Given values:

• Sales Revenue = $9,175.3 million
• Reported COGS (under LIFO) = $7,030.6 million

Now let's calculate the COGS under FIFO and the gross profit.

The gross profit under the FIFO method for all inventories in 2020 would have been $2,151.4 million.

Part C: Calculating the Gross Profit Margin (GPM)

The gross profit margin (GPM) is calculated as:

$\text{GPM} = \frac{\text{Gross Profit}}{\text{Sales Revenue}}$

1. As Reported (using LIFO)

$\text{Gross Profit as Reported} = \text{Sales Revenue} - \text{COGS}$ $\text{GPM as Reported} = \frac{\text{Gross Profit as Reported}}{\text{Sales Revenue}}$

2. Under FIFO

$\text{GPM under FIFO} = \frac{\text{Gross Profit under FIFO}}{\text{Sales Revenue}}$

Let's calculate both gross profit margins.

Gross Profit Margins (GPM):

• As reported (using LIFO): 23.37%
• Under FIFO: 23.45%

Summary of Results:

a. The amount of inventories purchased in 2020 was $6,993.6 million.
b. The gross profit under FIFO would have been $2,151.4 million.
c. The gross profit margin as reported was 23.37%, and under FIFO, it would have been 23.45%.

Would you like further details or have any other questions?

Here are some related questions for further exploration:

1. How does the change in the LIFO reserve affect taxes?
2. Why might a company prefer using LIFO over FIFO for inventory accounting?
3. What would happen if the company had a LIFO liquidation?
4. How does inventory accounting affect the company's cash flow?
5. What other financial ratios are impacted by changes in inventory methods?

Tip: FIFO tends to report higher profits in times of rising prices, while LIFO can help defer taxes.