Question Content AreaThe Jack Company began its operations on January 1, 2016, and used the LIFO method of accounting for its inventory. On January 1, 2018, Jack Company adopted FIFO in accounting for its inventory. The following information is available regarding cost of goods sold for each method: LIFO Cost ofFIFO Cost ofYearGoods SoldGoods Sold2016$470,000$350,0002017690,000450,0002018700,000540,000Assuming a tax rate of 35% and the same accounting change adopted for tax purposes, how would the effect of the accounting change be reported in opening retained earnings on the 2018 financial statements?–$700,000 restatement+$360,000 restatement+$234,000 restatementno restatement

Name: Question Content AreaThe Jack Company began its operations on January
Uploaded: 2024-03-20T06:32:37.000Z
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Description: Question Content AreaThe Jack Company began its operations on January 1, 2016, and used the LIFO method of accounting for its inventory. On January 1, 2018, Jack Company adopted FIFO in accounting for its inventory. The following information is avail

The retained earnings comprises of the accumulated profits of the business for different years.

Answered: Question Content Area The Jack Company…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter5: Inventories And Cost Of Goods Sold

Section: Chapter Questions

Problem 5.22MCE: Cost of Goods Sold, FIFO, and LIFO Kramer began operations early in 2016 and made the following...

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The Jack Company began its operations on January 1, 2016, and used the LIFO method of accounting for its inventory. On January 1, 2018, Jack Company adopted FIFO in accounting for its inventory. The following information is available regarding cost of goods sold for each method:

LIFO Cost of FIFO Cost of

Year Goods Sold Goods Sold

2016 $470,000 $350,000

2017 690,000 450,000

2018 700,000 540,000

Assuming a tax rate of 35% and the same accounting change adopted for tax purposes, how would the effect of the accounting change be reported in opening retained earnings on the 2018 financial statements?

–$700,000 restatement

+$360,000 restatement

+$234,000 restatement

no restatement

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