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Category > Accounting Posted 13 May 2017 My Price 5.00

Change in inventory costing methods comparative income statements

 

Change in inventory costing methods; comparative income statements

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 2016. At December 31, 2015, inventories were $120,000 (average cost basis) and were $124,000 a year earlier. Cecil-Booker’s accountants determined that the inventories would have totaled $155,000 at December 31, 2015, and $160,000 at December 31, 2014, if determined on a FIFO basis. A tax rate of 40% is in effect for all years

One hundred thousand common shares were outstanding each year. Income from continuing operations was $400,000 in 2015 and $525,000 in 2016. There were no discontinued operations either year

Required:

1. Prepare the journal entry to record the change in accounting principle. (All tax effects should be reflected in the deferred tax liability account.)

2. Prepare the 2016–2015 comparative income statements beginning with income from continuing operations. Include per share amounts.

 

 

 
 

Answers

Alpha Geek
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Status NEW Posted 13 May 2017 08:05 AM My Price 5.00

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file 1494665116-Answer.docx preview (208 words )
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