11A company has historically used the LIFO melhod to value its inventory However, in Year 3, the company decides to adopt the FIFO melhod because management believes it better reflects the value of its inventory given the current market conditionsInformation for the company can be seen in this table:YearYear 1Year 2Total at beginning of Year 3Year 3Net IncomeLIFOFIFO$200,000 $240,000125,000 175,000$325,000$415.000$95,000$115,000Which part of a journal entry should the company record at the beginning of Year 3 to account for the impact on Retained Earnings to reflect the change from LIFO to FIFO?O Debit Retained Earnings for $20,000O Debit Retained Earnings for $90,000O Credit Retained Earnings for $20,000O Credit Retained Earnings for $90,000

First-in, first-out (FIFO) cost flow assumption -Under the FIFO method, inventory purchased first is…

11 A company has hidorically used the IIFO melhod la value its inventory However, in Year 3, the company decides to adopt the FIFO melhod because management believes it better reflects the value of its inventory given the current market conditions Information for ition for the company can be seen in this table Year Net Income LIFO $200,000 FIFO $240,000 Year 1 Year 2 125.000 175.000 Total at beginning of Year 3 $325,000 $415.000 Year 3 $95,000 $115,000 Which part of a journal entry should the company record at the beginning of Year 3 to account for the impact on Retained Earnings to reflect the change from LIFO to FIFO? O Debit Retained Earnings for $20,000 O Debit Retained Earnings for $90,000 Credit Retained Earnings for $20.000 O Credit Retained Earnings for $90,000

11 A company has hidorically used the IIFO melhod la value its inventory However, in Year 3, the company decides to adopt the FIFO melhod because management believes it better reflects the value of its inventory given the current market conditions Information for ition for the company can be seen in this table Year Net Income LIFO $200,000 FIFO $240,000 Year 1 Year 2 125.000 175.000 Total at beginning of Year 3 $325,000 $415.000 Year 3 $95,000 $115,000 Which part of a journal entry should the company record at the beginning of Year 3 to account for the impact on Retained Earnings to reflect the change from LIFO to FIFO? O Debit Retained Earnings for $20,000 O Debit Retained Earnings for $90,000 Credit Retained Earnings for $20.000 O Credit Retained Earnings for $90,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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3 A company has four products in its inventory. Information about ending inventory is as follows: Total Net Realizable Value. Product 101 102 103 104 Total Cost $ 136,000 99,000 68,000 38,000 Required: 1. Determine the carrying value of ending inventory assuming the lower of cost or net realizable value (LCNRV) rule is applied to individual products. 2. Assuming that inventory write-downs are common for the company, record any necessary year-end adjusting entry. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Product Determine the carrying value of ending inventory assuming the lower of cost or net realizable value (LCNRV) rule is applied to individual products. 101 102 103 104 $ 108,000 118,000 58,000 58,000 Cost $ 136,000 $ 99,000 68,000 38,000 341,000 $ NRV 108,000 118,000 58,000 58,000 Inventory Value $ 0
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