Below is the net income of New Girl Instrument AG, a private company, computed under the two inventory methods using a periodic system. FIFO Average-Cost 2017 $26,000 $23,000 2018 30,000 25,000 2019 29,000 27,000 2020 34,000 30,000 (ignore tax considerations) Required: a. Assume that in 2020 New Girl 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 2020, and show net income reported for 2017, 2018, 2019, and 2020. b. Assume that in 2020 New Girl, which had been using the average-cost method since beginning operations in 2017, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2020, and show net income reported for 2017, 2018, 2019, and 2020.
Below is the net income of New Girl Instrument AG, a private company, computed under the two inventory methods using a periodic system.
| FIFO | Average-Cost | |
| 2017 | $26,000 | $23,000 |
| 2018 | 30,000 | 25,000 |
| 2019 | 29,000 | 27,000 |
| 2020 | 34,000 | 30,000 |
(ignore tax considerations)
Required:
a. Assume that in 2020 New Girl decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the
b. Assume that in 2020 New Girl, which had been using the average-cost method since beginning operations in 2017, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2020, and show net income reported for 2017, 2018, 2019, and 2020.
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