Exercise 20-7 (Algo) Change In principle; Change In Inventory cost method [LO20-2] Millington Materials is a leading supplier of building equipment, building products, materials, and timber for sale, with over 200 branches across the Mid-South. On January 1, 2024, management decided to change from the average inventory costing method t the FIFO inventory costing method at each of its outlets. The following table presents information concerning the change. The income tax rate for all years is 25%. Income before Income Tax Average Cost $11 million 8 million Difference $7 million Before 2823 2023 2924 FIFO $ 18 million 14 million 13 million 6 million 12 million 1 million Required: 1. Prepare the journal entry to record the change in accounting principle. 2. Determine the net income to be reported in the 2024-2023 comparative income statements. 4. Indicate the affect of the change in the 2024-2023 comparative statements of shareholders' equity assuming cash dividends wi $3.50 million each year and that no dividends were paid prior to 2023. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 4 Indicate the affect of the change in the 2024-2023 comparative statements of shareholders' equity assuming cash dividends were $3.5 million each year and that no dividends were paid prior to 2023. Note: Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50). MILLINGTON MATERIALS Statement of Shareholders' Equity For the Years Ended December 31, 2024 and 2023 ($ in millions) Common Stock Additional Paid-in Capital Retained Earnings Total Shareholdere Equity Balance at January 1, 2023 $ 0.00 S 0.00 $ 13.50 $ 0.00 Balance at December 31, 2023 S 0.00 $ Balance at December 31, 2024 S 0.00 S 0.00 $ 0.00 21.50 $ 0.00 S 0.00 < Required 2 Required 4 Show less A
Exercise 20-7 (Algo) Change In principle; Change In Inventory cost method [LO20-2] Millington Materials is a leading supplier of building equipment, building products, materials, and timber for sale, with over 200 branches across the Mid-South. On January 1, 2024, management decided to change from the average inventory costing method t the FIFO inventory costing method at each of its outlets. The following table presents information concerning the change. The income tax rate for all years is 25%. Income before Income Tax Average Cost $11 million 8 million Difference $7 million Before 2823 2023 2924 FIFO $ 18 million 14 million 13 million 6 million 12 million 1 million Required: 1. Prepare the journal entry to record the change in accounting principle. 2. Determine the net income to be reported in the 2024-2023 comparative income statements. 4. Indicate the affect of the change in the 2024-2023 comparative statements of shareholders' equity assuming cash dividends wi $3.50 million each year and that no dividends were paid prior to 2023. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 4 Indicate the affect of the change in the 2024-2023 comparative statements of shareholders' equity assuming cash dividends were $3.5 million each year and that no dividends were paid prior to 2023. Note: Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50). MILLINGTON MATERIALS Statement of Shareholders' Equity For the Years Ended December 31, 2024 and 2023 ($ in millions) Common Stock Additional Paid-in Capital Retained Earnings Total Shareholdere Equity Balance at January 1, 2023 $ 0.00 S 0.00 $ 13.50 $ 0.00 Balance at December 31, 2023 S 0.00 $ Balance at December 31, 2024 S 0.00 S 0.00 $ 0.00 21.50 $ 0.00 S 0.00 < Required 2 Required 4 Show less A
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 8E: In 2020, Frost Company, which began operations in 2018, decided to change from LIFO to FIFO because...
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![Exercise 20-7 (Algo) Change In principle; Change In Inventory cost method [LO20-2]
Millington Materials is a leading supplier of building equipment, building products, materials, and timber for sale, with over 200
branches across the Mid-South. On January 1, 2024, management decided to change from the average inventory costing method t
the FIFO inventory costing method at each of its outlets.
The following table presents information concerning the change. The income tax rate for all years is 25%.
Income before Income Tax
Average Cost
$11 million
8 million
Difference
$7 million
Before 2823
2023
2924
FIFO
$ 18 million
14 million
13 million
6 million
12 million
1 million
Required:
1. Prepare the journal entry to record the change in accounting principle.
2. Determine the net income to be reported in the 2024-2023 comparative income statements.
4. Indicate the affect of the change in the 2024-2023 comparative statements of shareholders' equity assuming cash dividends wi
$3.50 million each year and that no dividends were paid prior to 2023.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 4
Indicate the affect of the change in the 2024-2023 comparative statements of shareholders' equity assuming cash dividends
were $3.5 million each year and that no dividends were paid prior to 2023.
Note: Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000
should be entered as 5.50).
MILLINGTON MATERIALS
Statement of Shareholders' Equity
For the Years Ended December 31, 2024 and 2023
($ in millions)
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Total
Shareholdere
Equity
Balance at January 1, 2023
$
0.00 S
0.00 $
13.50 $
0.00
Balance at December 31, 2023
S
0.00 $
Balance at December 31, 2024
S
0.00
S
0.00 $
0.00
21.50 $
0.00
S
0.00
< Required 2
Required 4
Show less A](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbf1cbee5-a0ed-4e97-961d-47db16fb0368%2F37137245-51bf-4b37-a326-f3a18b58641e%2Fijszvsj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 20-7 (Algo) Change In principle; Change In Inventory cost method [LO20-2]
Millington Materials is a leading supplier of building equipment, building products, materials, and timber for sale, with over 200
branches across the Mid-South. On January 1, 2024, management decided to change from the average inventory costing method t
the FIFO inventory costing method at each of its outlets.
The following table presents information concerning the change. The income tax rate for all years is 25%.
Income before Income Tax
Average Cost
$11 million
8 million
Difference
$7 million
Before 2823
2023
2924
FIFO
$ 18 million
14 million
13 million
6 million
12 million
1 million
Required:
1. Prepare the journal entry to record the change in accounting principle.
2. Determine the net income to be reported in the 2024-2023 comparative income statements.
4. Indicate the affect of the change in the 2024-2023 comparative statements of shareholders' equity assuming cash dividends wi
$3.50 million each year and that no dividends were paid prior to 2023.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 4
Indicate the affect of the change in the 2024-2023 comparative statements of shareholders' equity assuming cash dividends
were $3.5 million each year and that no dividends were paid prior to 2023.
Note: Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000
should be entered as 5.50).
MILLINGTON MATERIALS
Statement of Shareholders' Equity
For the Years Ended December 31, 2024 and 2023
($ in millions)
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Total
Shareholdere
Equity
Balance at January 1, 2023
$
0.00 S
0.00 $
13.50 $
0.00
Balance at December 31, 2023
S
0.00 $
Balance at December 31, 2024
S
0.00
S
0.00 $
0.00
21.50 $
0.00
S
0.00
< Required 2
Required 4
Show less A
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