During 2022, Emerald Inc. decided to change from FIFO method of inventory valuation to the weighted average method.January 1 inventory under FIFO 7,100,000January 1 inventory under weighted average 7,700,000December 31 inventory under FIFO 7,900,000December 31inventory under weighted average 8,300,000What is the effect on January 1, 2022 inventory and on Retained Earnings?(A) no effectB January 1, 2022 inventory understated and Retained Earnings understatedJanuary 1, 2022 inventory understated and Retained Earnings overstatedJanuary 1, 2022 inventory overstated and Retained Earnings overstated

In this question, we have to calculate effect of inventory and retained earning On January 1

Answered: anuary 1 inventory under FIFO 7,100,000

Business

Accounting

anuary 1 inventory under FIFO 7,100,000

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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Question

During 2022, Emerald Inc. decided to change from FIFO method of inventory valuation to the weighted average method.
January 1 inventory under FIFO 7,100,000
January 1 inventory under weighted average 7,700,000
December 31 inventory under FIFO 7,900,000
December 31inventory under weighted average 8,300,000
What is the effect on January 1, 2022 inventory and on Retained Earnings?
(A) no effect
B January 1, 2022 inventory understated and Retained Earnings understated
January 1, 2022 inventory understated and Retained Earnings overstated
January 1, 2022 inventory overstated and Retained Earnings overstated

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