Below is the net income of Anita Ferreri Instrument Co., a private corporation, computed under the three inventory methods using a periodic system. FIFO Average-Cost LIFO 2018 $26,000 $24,000 $20,000 2019 30,000 25,000 21,000 2020 28,000 27,000 24,000 2021 34,000 30,000 26,000 Instructions (Ignore tax considerations.) a. Assume that in 2021 Ferreri decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2021, and show net income reported for 2018, 2019, 2020, and 2021. b. Assume that in 2021 Ferreri, which had been using the LIFO method since incorporation in 2018, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2021 and show net income reported for 2018, 2019, 2020, and 2021.
Below is the net income of Anita Ferreri Instrument Co., a private corporation, computed under the three inventory methods using a periodic system. FIFO Average-Cost LIFO 2018 $26,000 $24,000 $20,000 2019 30,000 25,000 21,000 2020 28,000 27,000 24,000 2021 34,000 30,000 26,000 Instructions (Ignore tax considerations.) a. Assume that in 2021 Ferreri decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2021, and show net income reported for 2018, 2019, 2020, and 2021. b. Assume that in 2021 Ferreri, which had been using the LIFO method since incorporation in 2018, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2021 and show net income reported for 2018, 2019, 2020, and 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Below is the net income of Anita Ferreri Instrument Co., a private corporation, computed under the three inventory methods using a periodic system.
|
|
FIFO
|
Average-Cost
|
LIFO
|
|
2018
|
$26,000
|
$24,000
|
$20,000
|
|
2019
|
30,000
|
25,000
|
21,000
|
|
2020
|
28,000
|
27,000
|
24,000
|
|
2021
|
34,000
|
30,000
|
26,000
|
Instructions
(Ignore tax considerations.)
a. Assume that in 2021 Ferreri decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the
b. Assume that in 2021 Ferreri, which had been using the LIFO method since incorporation in 2018, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2021 and show net income reported for 2018, 2019, 2020, and 2021.
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