Question 3 Company XYZ switched from LIFO inventory to FIFO during the year. The pretax income...
Question 3
Company XYZ switched from LIFO inventory to FIFO during the year. The pretax income data under each method is the following:
1) FIFO: $210,000 in 2020; $135,000 in 2019; $142,500 in 2018
2) LIFO: $189,000 in 2020; $111,500 in 2019; $138,000 in 2018
What net income amount did the company report in 2018? 2020? Assume a tax rate of 30%. Prepare the comparative income statements for the company in 2020.
Homework Answers
Answer
Tax rate is 30%
1 Net income report under FIFO
In 2018 = 142,500 - 30% = $99,750
In 2020 = 210,000 - 30% = $147,000
Net income report under LIFO
In 2018 = 138,000 - 30% = $96,600
In 2020 = 189,000 - 30% = $132,300
2 LIFO is taken as base in comparitive income statement in 2020.
Comparitive income statement in 2020
| LIFO | FIFO | Amount change | 0percentage | |
| Pretax income | 189,000 | 210,000 | 21,000 | 11.11% |
| Tax expense | 56,700 | 63,000 | 6,300 | 11.11% |
| Net income | 132,300 | 147,000 | 14,700 | 11.11% |
Calculations
AMOUNT CHANGE
In pretax income = 210,000 - 189,000 = $21,000
In tax expense = 63,000 - 56,700 = $6,300
In net income = 147,000 - 132,300 = $14,700
Percentage change
In pretax income = (21,000 / 189,000) × 100 = 11.11%
In tax expenses = (6,300 / 56,700) × 100 = 11.11%
In Net income = (14,700 / 132,300) × 100 = 11.11%.
The percentage change in pretax income, tax expense and net income is same as 11.11%
If YOU are like the answer please upvote.
Add Answer to:
Question 3
Company XYZ switched from LIFO inventory to FIFO during the
year. The pretax income...
Question 3 View Policies Current Attempt In Progress During 2020, Vaughn Company changed from FIFO to...
Question 3 View Policies Current Attempt In Progress During 2020, Vaughn Company changed from FIFO to weighted average inventory pricing Pretax income in 2019 and 2018 (Vaughn's first year of operations) under FIFO was $172,490 and $186,830, respectively. Pretax income using weighted average pricing in the prior years would have been $154,000 in 2019 and $188,000 in 2018. In 2020, Vaughn reported pretax income (using weighted average pricing) of $220,600. Show comparative Income statements for Vaughn, beginning with "Income before...
During 2017, Buffalo Company changed from FIFO to weighted-average inventory pricing. Pretax income in 2016 and...
During 2017, Buffalo Company changed from FIFO to weighted-average inventory pricing. Pretax income in 2016 and 201 operations) under FIFO was $ 174,100 and $ 197,880, respectively. Pretax income using weighted-average pricing in the 151.800 in 2016 and $ 182000 in 2 29%.) 15. In 2017,Buffalo reported pretax income (using weighted-average pricing) of $ 203,000. Show comparative inning with Income before income tax as presented on the 2017 income statement.(The tax rate in all years is
Practice Brief Exercise 4-5 During 2017, Metlock Inc. changed from LIFO to FIFO inventory pricing. Metlock...
Practice Brief Exercise 4-5 During 2017, Metlock Inc. changed from LIFO to FIFO inventory pricing. Metlock began operations in 2015 and its pretax income in 2016 and 2015 under LIFO was $470,000 and $568,000, respectively. Pretax income using FIFO pricing in the prior years would have been $501,000 in 2015 and $622,000 in 2016. In 2017, Metlock reported pretax income using FIFO pricing of $585,000. Show comparative income statements for Metlock beginning with "Income before income tax," as presented in...
Presented below are income statements prepared on a LIFO and FIFO basis for Cullumber Company, which...
Presented below are income statements prepared on a LIFO and
FIFO basis for Cullumber Company, which started operations on
January 1, 2019. The company presently uses the LIFO method of
pricing its inventory and has decided to switch to the FIFO method
in 2020. The FIFO income statement is computed in accordance with
the requirements of GAAP. Cullumber’s profit-sharing agreement with
its employees indicates that the company will pay employees 10% of
income before profit-sharing. Income taxes are ignored.
LIFO...
In 2020, Frost Company, which began operations in 2018, decided to change from LIFO to FIFO...
In 2020, Frost Company, which began operations in 2018, decided to change from LIFO to FIFO because management believed that FIFO better represented the flow of their inventory. Management prepared the following analysis showing the effect of this change: CHART OF ACCOUNTS Frost Company Ending Inventory LIFO FIFO Cumulative Difference General Ledger 12/31/2018 $239,600 $271,600 $32,000 12/31/2019 246,400 301,800 55,400 ASSETS REVENUE 12/31/2020 255,000 328,700 73.700 111 Cash 411 Sales Revenue 121 Accounts Receivable Frost reported net income of $2,487,000,...
Practice Brief Exercise 4-5 During 2017, Metlock Inc. changed from LIFO to FIFO inventory pricing. Metlock...
Practice Brief Exercise 4-5 During 2017, Metlock Inc. changed from LIFO to FIFO inventory pricing. Metlock began operations in 2015 and its pretax income in 2016 and 2015 under LIFO was $520,000 and $602,000, respectively. Pretax income using FIFO pricing in the prior years would have been $554,000 in 2015 and $662,000 in 2016. In 2017, Metlock reported pretax income using FIFO pricing of $629,000. Show comparative income statements for Metlock beginning with wIncome before income tax," as presented n...
Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax...
Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Wolfgang decided to change to the LIFO method. Net income in 2021 was correctly stated as $92 million. If the company had used LIFO in 2020, its cost of goods sold would have been higher by $8 million that year. Company accountants are able to determine that the cumulative net income for all years prior to 2020 would...
Presented below are income statements prepared on a LIFO and FIFO basis for Waterway Company, which...
Presented below are income statements prepared on a LIFO and
FIFO basis for Waterway Company, which started operations on
January 1, 2016. The company presently uses the LIFO method of
pricing its inventory and has decided to switch to the FIFO method
in 2017. The FIFO income statement is computed in accordance with
the requirements of GAAP. Waterway’s profit-sharing agreement with
its employees indicates that the company will pay employees 10% of
income before profit-sharing. Income taxes are ignored.
LIFO...
Presented below are income statements prepared on a LIFO and FIFO basis for Marigold Company, which...
Presented below are income statements prepared on a LIFO and
FIFO basis for Marigold Company, which started operations on
January 1, 2016. The company presently uses the LIFO method of
pricing its inventory and has decided to switch to the FIFO method
in 2017. The FIFO income statement is computed in accordance with
the requirements of GAAP. Marigold’s profit-sharing agreement with
its employees indicates that the company will pay employees 10% of
income before profit-sharing. Income taxes are ignored
LIFO...
In 2018, Hopyard Lumber changed its inventory method from LIFO to FIFO. Inventory at the end...
In 2018, Hopyard Lumber changed its inventory method from LIFO to FIFO. Inventory at the end of 2017 of $106,000 would have been $124,000 if FIFO had been used. Inventory at the end of 2018 is $138,000 using the new FIFO method but would have been $130,000 if the company had continued to use LIFO What is the effect of the change on 2018 cost of goods sold? higher 2018 cost of goods sold is
Question 3 View Policies Current Attempt In Progress During 2020, Vaughn Company changed from FIFO to weighted average inventory pricing Pretax income in 2019 and 2018 (Vaughn's first year of operations) under FIFO was $172,490 and $186,830, respectively. Pretax income using weighted average pricing in the prior years would have been $154,000 in 2019 and $188,000 in 2018. In 2020, Vaughn reported pretax income (using weighted average pricing) of $220,600. Show comparative Income statements for Vaughn, beginning with "Income before...
During 2017, Buffalo Company changed from FIFO to weighted-average inventory pricing. Pretax income in 2016 and 201 operations) under FIFO was $ 174,100 and $ 197,880, respectively. Pretax income using weighted-average pricing in the 151.800 in 2016 and $ 182000 in 2 29%.) 15. In 2017,Buffalo reported pretax income (using weighted-average pricing) of $ 203,000. Show comparative inning with Income before income tax as presented on the 2017 income statement.(The tax rate in all years is
Practice Brief Exercise 4-5 During 2017, Metlock Inc. changed from LIFO to FIFO inventory pricing. Metlock began operations in 2015 and its pretax income in 2016 and 2015 under LIFO was $470,000 and $568,000, respectively. Pretax income using FIFO pricing in the prior years would have been $501,000 in 2015 and $622,000 in 2016. In 2017, Metlock reported pretax income using FIFO pricing of $585,000. Show comparative income statements for Metlock beginning with "Income before income tax," as presented in...
Presented below are income statements prepared on a LIFO and
FIFO basis for Cullumber Company, which started operations on
January 1, 2019. The company presently uses the LIFO method of
pricing its inventory and has decided to switch to the FIFO method
in 2020. The FIFO income statement is computed in accordance with
the requirements of GAAP. Cullumber’s profit-sharing agreement with
its employees indicates that the company will pay employees 10% of
income before profit-sharing. Income taxes are ignored.
LIFO...
In 2020, Frost Company, which began operations in 2018, decided to change from LIFO to FIFO because management believed that FIFO better represented the flow of their inventory. Management prepared the following analysis showing the effect of this change: CHART OF ACCOUNTS Frost Company Ending Inventory LIFO FIFO Cumulative Difference General Ledger 12/31/2018 $239,600 $271,600 $32,000 12/31/2019 246,400 301,800 55,400 ASSETS REVENUE 12/31/2020 255,000 328,700 73.700 111 Cash 411 Sales Revenue 121 Accounts Receivable Frost reported net income of $2,487,000,...
Practice Brief Exercise 4-5 During 2017, Metlock Inc. changed from LIFO to FIFO inventory pricing. Metlock began operations in 2015 and its pretax income in 2016 and 2015 under LIFO was $520,000 and $602,000, respectively. Pretax income using FIFO pricing in the prior years would have been $554,000 in 2015 and $662,000 in 2016. In 2017, Metlock reported pretax income using FIFO pricing of $629,000. Show comparative income statements for Metlock beginning with wIncome before income tax," as presented n...
Presented below are income statements prepared on a LIFO and
FIFO basis for Waterway Company, which started operations on
January 1, 2016. The company presently uses the LIFO method of
pricing its inventory and has decided to switch to the FIFO method
in 2017. The FIFO income statement is computed in accordance with
the requirements of GAAP. Waterway’s profit-sharing agreement with
its employees indicates that the company will pay employees 10% of
income before profit-sharing. Income taxes are ignored.
LIFO...
Presented below are income statements prepared on a LIFO and
FIFO basis for Marigold Company, which started operations on
January 1, 2016. The company presently uses the LIFO method of
pricing its inventory and has decided to switch to the FIFO method
in 2017. The FIFO income statement is computed in accordance with
the requirements of GAAP. Marigold’s profit-sharing agreement with
its employees indicates that the company will pay employees 10% of
income before profit-sharing. Income taxes are ignored
LIFO...
In 2018, Hopyard Lumber changed its inventory method from LIFO to FIFO. Inventory at the end of 2017 of $106,000 would have been $124,000 if FIFO had been used. Inventory at the end of 2018 is $138,000 using the new FIFO method but would have been $130,000 if the company had continued to use LIFO What is the effect of the change on 2018 cost of goods sold? higher 2018 cost of goods sold is
Most questions answered within 3 hours.
-
Rice Products in Bangladesh
Business behavior is derived in large part from the basic cultural
environment...
asked 12 minutes ago -
The following base sequence is found for a mRNA fragment from
wild-type E. coli: 5'- UAUCAGUAGAUAAUGUAACC-3'...
asked 35 minutes ago -
For this exercise, round all regression parameters to three
decimal places.
One of the two tables...
asked 53 minutes ago -
What is the 5% level of significance for mean = 3.60, standard
deviation = 0.94, and...
asked 57 minutes ago -
Prior to beginning work on this discussion, please read the
article by Hayley Peterson, 15 Companies...
asked 1 hour ago -
Which pair of aqueous solutions, when mixed, will form a
precipitate?
A) NaNO3 and AgC2H3O2
B)...
asked 1 hour ago -
1-Write an algorithm to get two numbers from the user (as
inputs) and calculate the sum...
asked 5 hours ago -
Define white-collar crime. What is the difference between
offender and offense-based definitions of white-collar crime? What...
asked 5 hours ago -
Consider a reaction which is 1st order with respect to A and 1st
order with respect...
asked 5 hours ago -
c++
The length of the hypotenuse of a right-angled triangle is the
square root of the...
asked 6 hours ago -
When a metal rod is heated, not only its resistance but also its
length and cross‐sectional...
asked 6 hours ago -
write a c++ program that computes the L^1 - Norm of a given
vector (L^1 norm...
asked 6 hours ago