Question

Gradebook ORION Downloadable eTextbook onment CALCULATOR MESSAGE MY INSTRUCTOR FALL SCREEN PRINTER VERSION 4 BACK NEXT Exercise 22-2 Oriole Company began operations on January 1, 2015, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2018. The following information is available for the years 2015-2017. 2015 2016 2017 Net Income Computed Using Average-Cost Method FIFO Method $15,930 $19,030 18,000 20,030 IFO Method $12,110 13,890 16,840 (a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2018. (Credir account titles are automatically idented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Debit Account Titles and Explanation (6) Determine net income to be reported for 2015, 2016, and 2017 after giving effect to the change in accounting principle: Net Income 2015

Answer 1

a)

Accounting Titles and Explanations	Debit	Credit
Inventory	11,040
Retained Earnings		11,040

b)

	Net Income
2015	19,030
2016	21,210
2017	24,760

c)

Accounting Titles and Explanations	Debit	Credit
Inventory	22,160
Retained Earnings		22,160