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 have been lower by $24 million if LIFO had been used all
along, but have insufficient information to determine specific
effects of using LIFO in 2019. Last year, Wolfgang reported the
following net income amounts in its comparative income
statements:
| ($ in millions) | 2018 | 2019 | 2020 | ||||||
| Net income | $ | 92 | $ | 94 | $ | 96 | |||
Required:
1. Prepare the journal entry at the beginning of
2021 to record the change in accounting principle. (Ignore income
taxes.)
3. What amounts will Wolfgang report for net
income in its 2019–2021 comparative income statements?
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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...
Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2018, Wolfgang decided to change to the LIFO method. Net income in 2018 was correctly stated as $106 million. If the company had used LIFO in 2017, its cost of goods sold would have been higher by $15 million that year. Company accountants are able to determine that the cumulative net income for all years prior to 2017 would...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018 decided to change to the FIFO method. The inventory as reported at the end of 2017 using LIFO would have been $27 million higher using FIFO. Retained earnings reported at the end of 2016 and 2017 was $247 million and $267 million, respectively (reflecting the LIFO method). Those amounts reflecting the FIFO method would have been $257 million and $279 million, respectively. 2017 net...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018 decided to change to the FIFO method. The inventory as reported at the end of 2017 using LIFO would have been $13 million higher using FIFO. Retained earnings reported at the end of 2016 and 2017 was $233 million and $253 million, respectively (reflecting the LIFO method). Those amounts reflecting the FIFO method would have been $243 million and $265 million, respectively. 2017 net...
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During 2019 (its first year of operations) and 2020, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Fier decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2019, 2020. and 2021 were as follows: (5 in millions) Revenues Cost of goods sold (FIFO) Cost of goods sold (average) Operating expenses 2019 $ 450 (45) (66) (270) 2020...
During 2019 (its first year of operations) and 2020, Fieri Foods used the FIFO inventory costing...
During 2019 (its first year of operations) and 2020, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Fier decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2019, 2020. and 2021 were as follows: (5 in millions) Revenues Cost of goods sold (FIFO) Cost of goods sold (average) Operating expenses 2019 $ 450 (45) (66) (270) 2020...
1 points Save Ans GG Inc. uses LIFO. GG disclosed that if FIFO had been used,...
1 points Save Ans GG Inc. uses LIFO. GG disclosed that if FIFO had been used, inventory at the end of 2021 would have been S16 milion higher than the difference between UFO and FIFO at the end of 2020, Assuming GG has a 25 % income tax rate: Its reported cost of goods sold for 2021 would have been S16 milion higher if it had used FFO rather than LFO for its financial staements Its reported cost of goods...
During 2016 (its first year of operations) and 2017, Batali Foods used the FIFO inventory costing method for both financ...
During 2016 (its first year of operations) and 2017, Batali Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2018, Batali decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2018, 2017, and 2016 were as follows ($ in millions): 2018 2017 2016 Revenues $ 570 $ 540 $ 530 Cost of goods sold (FIFO) (61 ) (55 ) (53...
Joey Co. decided to switch from LIFO method of costing inventories to the FIFO method at...
Joey Co. decided to switch from LIFO method of costing inventories to the FIFO method at the beginning of 2018 [1/1/2019]. The inventory as reported at the end of 2016 using LIFO would have been $60,000 higher using FIFO. Retained earnings had been reported at 12/31/2018 as $780,000 [reflecting the LIFO method]. The Tax rate is 40% 1). Calculate the balance in retained earnings at the time of the change [beginning of 20191 as it would have been reported if...
Spando Apparel uses the LIFO inventory method for external reporting and for income tax purposes but...
Spando Apparel uses the LIFO inventory method for external reporting and for income tax purposes but maintains its internal records using FIFO. The following disclosure note was included in a recent annual report: Inventories ($ in millions): Total inventories LIFO reserve 2021 $ 667 (111) $ 556 2020 $646 (65) $581 The company's income statement reported cost of goods sold of $3,260 million for the fiscal year ended December 31, 2021 Required: 1. Spando adjusts the LIFO reserve at the...
Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception...
Rockwell Corporation uses a periodic inventory system and has 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: $140,000 Beginning inventory, FIFO (5,000 units @ $28) Purchases: 5,000 units @ $34 5,000 units @ $38 Cost of goods available for sale Sales for 2018 (6,000 units @ $74) $170,000 190,000 360,000 $500,000 $444,000 Additional Information: a. The company's effective...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018 decided to change to the FIFO method. The inventory as reported at the end of 2017 using LIFO would have been $13 million higher using FIFO. Retained earnings reported at the end of 2016 and 2017 was $233 million and $253 million, respectively (reflecting the LIFO method). Those amounts reflecting the FIFO method would have been $243 million and $265 million, respectively. 2017 net...
During 2019 (its first year of operations) and 2020, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Fier decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2019, 2020. and 2021 were as follows: (5 in millions) Revenues Cost of goods sold (FIFO) Cost of goods sold (average) Operating expenses 2019 $ 450 (45) (66) (270) 2020...
During 2019 (its first year of operations) and 2020, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Fier decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2019, 2020. and 2021 were as follows: (5 in millions) Revenues Cost of goods sold (FIFO) Cost of goods sold (average) Operating expenses 2019 $ 450 (45) (66) (270) 2020...
1 points Save Ans GG Inc. uses LIFO. GG disclosed that if FIFO had been used, inventory at the end of 2021 would have been S16 milion higher than the difference between UFO and FIFO at the end of 2020, Assuming GG has a 25 % income tax rate: Its reported cost of goods sold for 2021 would have been S16 milion higher if it had used FFO rather than LFO for its financial staements Its reported cost of goods...
Joey Co. decided to switch from LIFO method of costing inventories to the FIFO method at the beginning of 2018 [1/1/2019]. The inventory as reported at the end of 2016 using LIFO would have been $60,000 higher using FIFO. Retained earnings had been reported at 12/31/2018 as $780,000 [reflecting the LIFO method]. The Tax rate is 40% 1). Calculate the balance in retained earnings at the time of the change [beginning of 20191 as it would have been reported if...
Spando Apparel uses the LIFO inventory method for external reporting and for income tax purposes but maintains its internal records using FIFO. The following disclosure note was included in a recent annual report: Inventories ($ in millions): Total inventories LIFO reserve 2021 $ 667 (111) $ 556 2020 $646 (65) $581 The company's income statement reported cost of goods sold of $3,260 million for the fiscal year ended December 31, 2021 Required: 1. Spando adjusts the LIFO reserve at the...
Rockwell Corporation uses a periodic inventory system and has 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: $140,000 Beginning inventory, FIFO (5,000 units @ $28) Purchases: 5,000 units @ $34 5,000 units @ $38 Cost of goods available for sale Sales for 2018 (6,000 units @ $74) $170,000 190,000 360,000 $500,000 $444,000 Additional Information: a. The company's effective...
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