Shondee Corporation uses the lower of cost or market and FIFO inventory methods. At the end...
Shondee Corporation uses the lower of cost or market and FIFO inventory methods. At the end of 2018, the FIFO cost of the ending inventory was $181,000, and the market value of the inventory was $160,000. The corporation switched to LIFO in 2019. If required, round your answer to the nearest dollar. As a result, Shondee Corporation must add: $ ______blank_____
to income for each of the years 2019, 2020, and 2021.
Homework Answers
Answer :
Income per year = Value under FIFO Method - Value Under Cost Method / No.of year
= $ 181,000 - $ 160,000 / 3
= $ 21,000 / 3
= $7,000
Therefore $7,000 should be reported as income for all three years.
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Shondee Corporation uses the lower of cost or market and FIFO
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at Year-End Costs
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used the FIFO cost method since inception of the company in 1979.
In 2021, the company decided to switch to the average cost method.
Data for 2021 are as follows:
Beginning inventory, FIFO (5,600 units @ $26)
$
145,600
Purchases:
5,600 units @ $32
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179,200
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at Year-End Costs
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