When changing from the average cost method to FIFO, the company: Multiple Choice a. Includes in...
When changing from the average cost method to FIFO, the company:
Multiple Choice
a. Includes in current year’s income the cumulative after-tax difference that would have resulted if the company had used FIFO in all prior years.
b. Revises comparative financial statements.
c. Records a journal entry to adjust the book balances from their current amounts to what those balances would have been using FIFO.
d. All of these answer choices are correct.
Homework Answers
When changing from the average cost method to FIFO, the company:
d. All of these answer choices are correct.
Add Answer to:
When changing from the average cost method to FIFO, the
company:
Multiple Choice
a. Includes in...
When changing from the average cost method to FIFO, the company: Multiple Choice Includes in current...
When changing from the average cost method to FIFO, the company: Multiple Choice Includes in current year’s income the cumulative after-tax difference that would have resulted if the company had used FIFO in all prior years. Revises comparative financial statements. Records a journal entry to adjust the book balances from their current amounts to what those balances would have been using FIFO. All of these answer choices are correct. Next
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...
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...
B&G Incorporated decided to change from the FIFO method of valuing inventory to the weighted average...
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.
Here are the choices:
Statement of Retained Earnings (Partial) For...
When a company changes from LIFO to another inventory method, the change is reported Multiple Choice...
When a company changes from LIFO to another inventory method, the change is reported Multiple Choice as a change in an accounting estimate. prospectively because it is impractical to determine the effects of this change on prior years’ net income. as an error correction. using the retrospective approach.
he Cecil-Booker Vending Company changed its method of valuing inventory from the average cost method to...
he Cecil-Booker Vending Company changed its method of valuing inventory from the average cost method to the FIFO cost method at the beginning of 2018. At December 31, 2017, inventories were $124,000 (average cost basis) and were $128,000 a year earlier. Cecil-Booker’s accountants determined that the inventories would have totaled $163,000 at December 31, 2017, and $168,000 at December 31, 2016, if determined on a FIFO basis. A tax rate of 40% is in effect for all years. One hundred...
E7-6 Calculating Ending Inventory and Cost of Goods Sold under FIFO, LIFO, and Average Cost L07-2...
E7-6 Calculating Ending Inventory and Cost of Goods Sold under FIFO, LIFO, and Average Cost L07-2 Hamilton Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1: Units Unit Cost 2,000 $5 Inventory, December 31, prior year For the current year: Purchase, March 21 Purchase, August 1 Inventory, December 31, current year 6,000 4,000 3,000 Required: Compute ending inventory and...
Company began operations several years ago and has used the average-cost method of inventory valuation since its inception. In 2019, it decides to switch to the FIFO method. You are provided with the...
Company began operations several years ago and has used the average-cost method of inventory valuation since its inception. In 2019, it decides to switch to the FIFO method. You are provided with the following information. Net income under avg cost Excess of average cost over fifo cost goods sold pretax Net income FIFO basis Years prior 2017 $370,000 $72,000 2017 $340,000 60,000 2018 $320,000 44,000 2019 $380,000 Instructions: 1. Prepare the journal entry to record the change from the Average...
The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost method to...
The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost method to the FIFO cost method at the beginning of 2021. At December 31, 2020, inventories were $115,000 (average cost basis) and were $119,000 a year earlier. Cecil-Booker’s accountants determined that the inventories would have totaled $145,000 at December 31, 2020, and $150,000 at December 31, 2019, if determined on a FIFO basis. A tax rate of 25% is in effect for all years. One hundred...
In 2021, CPS Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2020, CPS’s inventories were $42 million (FIFO). CPS’s records indicated that the inventories would have totaled $31.8 million at
In 2021, CPS Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2020, CPS’s inventories were $42 million (FIFO). CPS’s records indicated that the inventories would have totaled $31.8 million at December 31, 2020, if determined on an average cost basis. Required:1. Prepare the journal entry to record the adjustment. (Ignore income taxes.) (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5)....
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.
Here are the choices:
Statement of Retained Earnings (Partial) For...
E7-6 Calculating Ending Inventory and Cost of Goods Sold under FIFO, LIFO, and Average Cost L07-2 Hamilton Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1: Units Unit Cost 2,000 $5 Inventory, December 31, prior year For the current year: Purchase, March 21 Purchase, August 1 Inventory, December 31, current year 6,000 4,000 3,000 Required: Compute ending inventory and...
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