B&G Incorporated decided to change from the FIFO method of valuing inventory to the weighted average method in July 2017. The cumulative effect on prior years of retrospective application of the new inventory costing method was determined to be $15,000 net of $4,000 tax. As prices are decreasing, cost of sales would be lower and ending inventory higher for the preceding period. Retained earnings on January 1, 2017 was $241,000.
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Homework Answers
| Statement of Retained Earnings (Partial) | |
| For the year ended December 31, 2017 | |
| Retained earnings on January 1, 2017 as Previously reported | $241,000 |
| Cumulative Effect on prior years of Retrospective application of new inventory costing method | $ 15,000 |
| Adjusted balance of Retained Earnings, January 1, 2017 | $ 256000 |
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