Accounting for Correction of Errors, Change in Accounting Estimates and Accounting Policies Problem 1 CPA Co. has been using the FIFO method of inventory costing since it began operations in 2019. In 2020, the company decided to change to the weighted average method. The following are the December 31 inventory balances under each method: 2019 2020 FIFO P450,000 895,000 Weighted Average P560,000 999,000 _1. What is the cumulative effect of this accounting change in the January 1, 2020 Retained Earnings as a result of the accounting change? (Income tax rate is 30%) Indicate whether debit or credit.
Accounting for Correction of Errors, Change in Accounting Estimates and Accounting Policies Problem 1 CPA Co. has been using the FIFO method of inventory costing since it began operations in 2019. In 2020, the company decided to change to the weighted average method. The following are the December 31 inventory balances under each method: 2019 2020 FIFO P450,000 895,000 Weighted Average P560,000 999,000 _1. What is the cumulative effect of this accounting change in the January 1, 2020 Retained Earnings as a result of the accounting change? (Income tax rate is 30%) Indicate whether debit or credit.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Accounting for Correction of Errors, Change in Accounting Estimates
and Accounting Policies
Problem 1
CPA Co. has been using the FIFO method of inventory costing since it began operations in 2019. In
2020, the company decided to change to the weighted average method. The following are the December
31 inventory balances under each method:
2019
2020
FIFO
P450,000
895,000
Weighted Average
P560,000
999,000
_1. What is the cumulative effect of this accounting change in the January 1, 2020
Retained Earnings as a result of the accounting change? (Income tax rate is 30%) Indicate whether debit
or credit.
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