g Henry Company began operations on January 1, 2020, and uses the FIFO method in costing its raw material inventory. The company is contemplating a change to the LIFO method and is interested in determining what effect such a change will have on net income. Accordingly, the following information has been developed: Final Inventory 2020 2021 FIFO $640,000 $712,000 LIFO 560,000 636,000 Net Income (computed under the FIFO me

g Henry Company began operations on January 1, 2020, and uses the FIFO method in costing its raw material inventory. The company is contemplating a change to the LIFO method and is interested in determining what effect such a change will have on net income. Accordingly, the following information has been developed: Final Inventory 2020 2021 FIFO $640,000 $712,000 LIFO 560,000 636,000 Net Income (computed under the FIFO me

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 6E: Berg Company began operations on January 1, 2019, and uses the FIFO method in costing its raw...

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Wildhorse Company began operations on January 1, 2020, and uses the FIFO method in costing its raw material inventory. Management is contemplating a change to the LIFO method and is interested in determining what effect such a change will have on net income. Accordingly, the following information has been developed: Final Inventory 2020 2021 FIFO $580000 $ 672000 LIFO 550000 656000 Net Income (computed under the FIFO method) 1080000 1310000 The company deems it impracticable to apply the retrospective approach. Based on the above information, a change to the LIFO method in 2021 would result in net income for 2021 of $1294000. $1280000. $1080000. $1310000.
Heinz Company began operations on January 1, 2019, and uses the FIFO method in costing its raw material inventory. Management is contemplating a change to the LIFO method and is interested in determining what effect such a change will have on net income. Accordingly, the following information has been developed:Final Inventory 2019 2020FIFO ₱640,000 ₱ 712,000LIFO 560,000 636,000Net Income (computed under the FIFO method) 980,000 1,030,000Based on the above information, a change to the LIFO method in 2020 would result in net income for 2020 ofa. ₱1,070,000 c. ₱954,000b. ₱1,030,000 d. ₱950,000
Loyer Company began operations on January 1, 2022, and uses the FIFO method in costing its raw material inventory. Management is contemplating a change to the LIFO method and is interested in determining what effect such a change will have on net income. Accordingly, the following information has been developed: Final Inventory 2022 2023 FIFO $640,000 $ 712,000 LIFO 560,000 636,000 Net Income (computed under the FIFO method) 980,000 1,030,000 Based on the above information, a change to the LIFO method in 2023 would result in net income for 2023 of
Wildhorse Company began operations on January 1, 2023 and uses the FIFO method in costing its raw material inventory. Management is contemplating a change to the LIFO method and is interested in determining what effect such a change will have on net income. Accordingly, the following information has been developed: Final Inventory FIFO LIFO 2023 $680000 O $1306000. O $1375000. O $1310000. O $1180000. 550000 Net Income (computed under the FIFO method) 1080000 2024 $676000 672000 1310000 Based on the above information, a change to the LIFO method in 2024 (ignore income tax considerations) would result in net income for 2024 of
Sheridan Inc. has selected specific identification as its inventory costing method. At December 31, 2025, it has the following information for its finished goods: \table[[Replacement value,$5980
The Opal Company was incorporated and began operations on January 1, 2019. Opal used the weighted-average method for costing inventories. Effective January 1, 2020, Opal changed to FIFO for costing inventories and can justify the change. Information related to 2019 and 2020 inventory cost and net income is presented below: 2019 2020 Ending inventory, using: Weighted-average $650,000 $620,000 FIFO 680,000 630,000 Net income 700,000 750,000 (using average) (using FIFO) Opal's income tax rate is 30% for both 2019 and 2020. Required:Calculate the amount of the cumulative effect of the change on beginning retained earnings on January 1, 2020, that would appear on Opal's statement of retained earnings for the year ended December 31, 2020.
! Required information [The following information applies to the questions displayed below.] Shown below are net income amounts as they would be determined by Weihrich Steel Company by each of three different inventory costing methods ($ in thousands). Pre-2020 2020 FIFO $2,980 840 $3,820 Average Cost $2,720 510 $3,230 LIFO $2,460 585 $3,045 3. Assume that Weihrich used FIFO before 2021, and then in 2021 decided to switch to LIFO cost. Weihrich's records of inventory purchases and sales are not available for several previous years. Therefore, the pre-2020 LIFO information ($2,460) is not available. However, Weihrich does have the information needed to apply LIFO on a prospective basis beginning in 2020. Prepare the journal entry to record the change in accounting principle. (Ignore income tax effects.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in thousands.)
The management of Blue Spruce Corp. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests your help in determining the results of operations for 2022 if either the FIFO or the LIFO method had been used. For 2022, the accounting records show these data: Inventories Purchases and Sales Beginning ( 10,500 units) $ 21,000 Total net sales ( 270,000 units) $ 1,120,500 Ending ( 25,500 units) Total cost of goods purchased ( 285,000 units) 645,750 Purchases were made quarterly as follows. Quarter Units Unit Cost Total Cost 1 75,000 $ 2.05 $ 153,750 2 60,000 2.15 129,000 60,000 2.30 138,000 4 90,000 2.50 225,000 285,000 $ 645,750 Operating expenses were $ 130,000, and the company's income tax rate is 40%.
Shannon, Inc. values its inventory at the lower-of-cost-or-NRV. The following information is available from the company's inventory records as of December 31, 2022. Unit Estimated Selling Completion & Disposal Cost/Unit Item Quantity Cost Price/Unit X490 10,200 $12.50 $14.00 $3.00 X512 4,950 7.00 8.90 0.25 X682 18,000 19.00 31.55 3.25 Z195 12,500 14.25 19.80 1.40 Z846 8,600 12.00 13.95 2.10
Splish Brothers, Inc. values its inventory at the lower-of-LIFO-cost-or-market. The following information is available from the company’s inventory records as of December 31, 2020. Item Quantity UnitCost ReplacementCost/Unit Estimated SellingPrice/Unit Completion & DisposalCost/Unit Normal ProfitMargin/Unit X490 8,976 $11.00 $10.52 $12.32 $2.64 $2.99 X512 4,356 6.16 6.60 7.83 0.22 1.58 X682 15,840 16.72 16.37 27.76 2.86 7.92 Z195 11,000 12.54 12.32 17.42 1.23 5.06 Z846 7,568 10.56 11.22 12.28 1.85 0.97 (a) Correct answer icon Your answer is correct. Calculate the lower-of-cost-or-market using the individual-item approach. (Round answers to 2 decimal places, e.g. 52.75.) (b) Partially correct answer icon Your answer is partially correct. Show the journal entries Splish Brothers, Inc. will…
On December 31, 2024, the inventory of Bramble Company amounts to $880,000. During 2025, the company decides to use the dollar-value LIFO method of costing inventories. On December 31, 2025, the inventory is $1,179,750 at December 31, 2025, prices. Using the December 31, 2024, price level of 100 and the December 31, 2025, price level of 110, compute the inventory value at December 31, 2025, under the dollar - value LIFO method. Solve for Inventory, December 31, 2025 $
Webster Products, Inc., adopted the dollar-value LIFO method of determining inventory costs for financial and income tax reporting on January 1, 2021. Webster continues to use the FIFO method for internal decision-making purposes. Webster's FIFO inventories at December 31, 2021, 2022, and 2023, were $300.000, $412.500, and $585,000, respectively. Internally generated cost indexes are used to convert FIFO inventory amounts to dollar-value LIFO amounts. Webster estimated these indexes as follows: 2021 2022 2823 1.00 1.25 1.50 Required: 1. Determine Webster's dollar-value LIFO inventory at December 31, 2022 and 2023. 2. Will Webster account for the change (a) retrospectively or (b) prospectively? 1. LIFO inventory at 2022 LIFO inventory at 2023 2. Webster account for the change