Rhode, Inc., began business in Year 1. Inventory reported in the Year 3 year-end balance sheet, determined using the average cost method, was $170,000. In Year 4, the company decided to change its inventory method to FIFO. If the company had used the FIFO method in Year 3, ending inventory would have been $220,000. Prepare the appropriate journal entry to record this change. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Homework Answers
The changes in method of valuation of inventory from Average method to FIFO is a 'Change in Accounting Policy'. This is being voluntary change, it has to be applied retrospectively. Retrospective application means applying new accounting policy to transactions and events as if that policy had always been applied. Hence it shall be adjusted with opening balance by recording difference between Average method and FIFO method.
Retrospective application of change in inventory valuation method is done by increasing or decreasing 'Retained Earnings'. Hence the entry is
Inventory a/c Dr 50,000
To Retained Earnings 50,000
(To record change in inventory valuation method to FIFO by applying retrospectively)
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Rhode, Inc., began business in Year 1. Inventory reported in the
Year 3 year-end balance sheet,...
Knowledge Check 01 Rhode Inc. began business in Year 1 Inventory reported in the Year 3...
Knowledge Check 01 Rhode Inc. began business in Year 1 Inventory reported in the Year 3 year-end balance sheet, determined using the average cost method, was $170,000. In Year 4, the company decided to change its inventory method to FIFO. If the company had used the FIFO method in Year 3. ending inventory would have been $220.000. Prepare the appropriate journal entry to record this change. (If no entry is required for a transaction/event, select "No journal entry required" in...
Goddard Company has used the FIFO method of inventory valuation since it began operations in 2018....
Goddard Company has used the FIFO method of inventory valuation since it began operations in 2018. Goddard decided to change to the average cost method for determining inventory costs at the beginning of 2021. The following schedule shows year-end inventory balances under the FIFO and average cost methods: Year FIFO Average Cost 2018 $ 46,600 $ 57,200 2019 82,800 72,600 2020 89,400 82,800 Required: 1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the...
Exercise 9-24 (Algo) Change in inventory costing methods [LO9-6] Goddard Company has used the FIFO method...
Exercise 9-24 (Algo) Change in inventory costing methods [LO9-6] Goddard Company has used the FIFO method of inventory valuation since it began operations in 2018. Goddard decided to change to the average cost method for determining inventory costs at the beginning of 2021. The following schedule shows year-end inventory balances under the FIFO and average cost methods: Year 2018 2019 2020 FIFO $45,600 79,800 85,400 Average Cost $55,200 71,600 79,800 Required: 1. Ignoring income taxes, prepare the 2021 journal entry...
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Goddard Company has used the FIFO method of inventory valuation since it began operations in 2018....
Goddard Company has used the FIFO method of inventory valuation since it began operations in 2018. Goddard decided to change to the average cost method for determining inventory costs at the beginning of 2021. The following schedule shows year-end inventory balances under the FIFO and average cost methods: Year FIFO Average Cost 2018 $45,500 $55,000 2019 79,500 71,500 2020 85,000 79,500 Required: 1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost...
Fortune Apple Shoe Buyers (FASB) engaged in the transactions below. 1. Purchased $9,500 of inventory on...
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At the end of the year, a company reports a balance in its Allowance for Uncollectible...
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At the end of the year, a company has a balance in Allowance for Uncollectible Accounts...
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Bronson Industries reported a deferred tax liability of $10.4 million for the year ended December 31,...
Bronson Industries reported a deferred tax liability of $10.4 million for the year ended December 31, 2017, related to a temporary difference of $26 million. The tax rate was 40%. The temporary difference is expected to reverse in 2019 at which time the deferred tax liability will become payable. There are no other temporary differences in 2017-2019. Assume a new tax law is enacted in 2018 that causes the tax rate to change from 40% to 30% beginning in 2019....
Knowledge Check 01 Rhode Inc. began business in Year 1 Inventory reported in the Year 3 year-end balance sheet, determined using the average cost method, was $170,000. In Year 4, the company decided to change its inventory method to FIFO. If the company had used the FIFO method in Year 3. ending inventory would have been $220.000. Prepare the appropriate journal entry to record this change. (If no entry is required for a transaction/event, select "No journal entry required" in...
Exercise 9-24 (Algo) Change in inventory costing methods [LO9-6] Goddard Company has used the FIFO method of inventory valuation since it began operations in 2018. Goddard decided to change to the average cost method for determining inventory costs at the beginning of 2021. The following schedule shows year-end inventory balances under the FIFO and average cost methods: Year 2018 2019 2020 FIFO $45,600 79,800 85,400 Average Cost $55,200 71,600 79,800 Required: 1. Ignoring income taxes, prepare the 2021 journal entry...
Cambridge Technologies Inc. began 2017 with inventory of $26,000. During the year, Cambridge purchased inventory costing $105,000 and sold goods for $170,000, with all transactions on account. Cambridge ended the year with inventory $33,000 Journalize all the necessary transactions under the periodic inventory system. Requirement 1. Journalize all the necessary transactions under the periodic inventory system. (Record debits first, then credits. Explanations are not required.) First, journalize the inventory purchase. Journal Entry Accounts Debit Credit Journalize the sales transaction. Journal...
On December 31, 2020, Rebel Corporation's balance sheet reported the following Common stock, $1 par Paid-in capital-excess of par Retained earnings Treasury stock (19,000 shares at cost) $1,000,000 3,900,000 5,270,000 (570,000) During 2021, Rebel decided to discontinue accounting for share buybacks as treasury shares. Instead, the shares will be treated as having been retired. Required: Prepare the appropriate journal entry to effect this change. (If no entry is required for a transaction/event, select "No journal entry required" in the first...
Goddard Company has used the FIFO method of inventory valuation since it began operations in 2018. Goddard decided to change to the average cost method for determining inventory costs at the beginning of 2021. The following schedule shows year-end inventory balances under the FIFO and average cost methods: Year FIFO Average Cost 2018 $45,500 $55,000 2019 79,500 71,500 2020 85,000 79,500 Required: 1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost...
Fortune Apple Shoe Buyers (FASB) engaged in the transactions below. 1. Purchased $9,500 of inventory on account 2. Paid weekly salaries, $1,050. 3. Recorded sales for the first week: Cash: $8,400; On account: $6,600. 4. Paid for inventory purchased in event (1). 5. Placed an order for $7,500 of inventory. Required: Prepare the appropriate journal entry for each transaction (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list...
At the end of the year, a company reports a balance in its Allowance for Uncollectible Accounts of $2,100 (credit) before any year-end adjustment. The company estimates future uncollectible accounts to be 3% of credit sales for the year. Credit sales for the year total $281,000. Record the adjustment for the allowance for uncollectible accounts using the percentage-of-credit-sales method. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction...
At the end of the year, a company has a balance in Allowance for Uncollectible Accounts of $2,000 (debit) before any year-end adjustment. The balance of Accounts Receivable is $180,000. The company estimates that 5% of accounts receivable will not be collected over the next year. Record the adjustment for uncollectible accounts. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the adjustment...
Bronson Industries reported a deferred tax liability of $10.4 million for the year ended December 31, 2017, related to a temporary difference of $26 million. The tax rate was 40%. The temporary difference is expected to reverse in 2019 at which time the deferred tax liability will become payable. There are no other temporary differences in 2017-2019. Assume a new tax law is enacted in 2018 that causes the tax rate to change from 40% to 30% beginning in 2019....
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