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How do I switch from LIFO to FIFO method on the balance sheet if the income...

How do I switch from LIFO to FIFO method on the balance sheet if the income for the last three years would have been $45,000 higher using the FIFO method. Use FIFO when calculating the revised stockholder's equity figure. Current inventory under LIFO method is $125,000 and current R/E are $401,181. All changes in company's income will be reflected by the changes in R/E

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The cumulative effect on change in inventory valuation method from LIFO to FIFO shall be adjusted in Retained earnings. Since in this case there is increase in value for switching from LIFO to FIFO such change such will adjusted in Retained earnings by way of increase in Retained earnings. Hence $45,000 shall be credited to Retained earnings and debit will be given to Inventory. So revised Inventory value will be $125,000 + $45,000 = $170,000 which will be shown in Inventories under Current Assets of Balance Sheet.

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