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Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2024 decided to change to the FIFO method. The inventory as reported at the end of 2023 using LIFO would have been $30 million higher using FIFO. Retained earnings reported at the end of 2022 and 2023 was $250 million and $270 million, respectively (reflecting the LIFO method). Those amounts reflecting the FIFO method would have been $260 million and $282 million, respectively. 2023 net income reported at the end of 2023 was $38 million (LIFO method) but would have been $40 million using FIFO. After changing to FIFO, 2024 net income was $46 million. Dividends of $9 million were paid each year. The tax rate is 25%. Required: 1. Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. 2. In the 2024-2023 comparative Income statements, what will be the amounts of net Income reported for 2023 and 2024? 3. Prepare the 2024-2023 retained earnings column of the comparative statements of shareholders' equity.

Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2024 decided to change to the FIFO method. The inventory as reported at the end of 2023 using LIFO would have been $30 million higher using FIFO. Retained earnings reported at the end of 2022 and 2023 was $250 million and $270 million, respectively (reflecting the LIFO method). Those amounts reflecting the FIFO method would have been $260 million and $282 million, respectively. 2023 net income reported at the end of 2023 was $38 million (LIFO method) but would have been $40 million using FIFO. After changing to FIFO, 2024 net income was $46 million. Dividends of $9 million were paid each year. The tax rate is 25%. Required: 1. Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. 2. In the 2024-2023 comparative Income statements, what will be the amounts of net Income reported for 2023 and 2024? 3. Prepare the 2024-2023 retained earnings column of the comparative statements of shareholders' equity.

FINANCIAL ACCOUNTING
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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Required 1 Required 2 Required 3 In the 2024-2023 comparative income statements, what will be the amounts of net income reported for 2023 and 2 Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Net income O Required 1 2023 2024 ($ in millions) Show Transcribed Text Required 2 Required 3 Prepare the 2024-2023 retained earnings column of the comparative statements of shareholders' equity. Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). FANTASY FASHIONS Statement of Shareholders' Equity For the Years Ended December 31, 2024 and 2023 Additional Paid-in Capital Balance at January 1, 2023 Net income Cash dividends Balance at December 31, 2023 Net income Cash dividends Balance at December 31, 2024 Common Stock Ċ Retained Total Earnings ($ in Shareholders' millions) Equity $ $ 0 0
Transcribed Image Text:Required 1 Required 2 Required 3 In the 2024-2023 comparative income statements, what will be the amounts of net income reported for 2023 and 2 Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Net income O Required 1 2023 2024 ($ in millions) Show Transcribed Text Required 2 Required 3 Prepare the 2024-2023 retained earnings column of the comparative statements of shareholders' equity. Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). FANTASY FASHIONS Statement of Shareholders' Equity For the Years Ended December 31, 2024 and 2023 Additional Paid-in Capital Balance at January 1, 2023 Net income Cash dividends Balance at December 31, 2023 Net income Cash dividends Balance at December 31, 2024 Common Stock Ċ Retained Total Earnings ($ in Shareholders' millions) Equity $ $ 0 0
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2024 decided to change to the FIFO method. The inventory as reported at the end of 2023 using LIFO would have been $30 million higher using FIFO. Retained earnings reported at the end of 2022 and 2023 was $250 million and $270 million, respectively (reflecting the LIFO method). Those amounts reflecting the FIFO method would have been $260 million and $282 million, respectively. 2023 net income reported at the end of 2023 was $38 million (LIFO method) but would have been $40 million using FIFO. After changing to FIFO, 2024 net income was $46 million. Dividends of $9 million were paid each year. The tax rate is 25%. Required: 1. Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. 2. In the 2024-2023 comparative income statements, what will be the amounts of net income reported for 2023 and 2024? 3. Prepare the 2024-2023 retained earnings column of the comparative statements of shareholders' equity. Complete this question by entering your answers in the tabs below. Show Transcribed Text Journal entry worksheet < 1 Record the change in accounting principle. Note: Enter debits before credits. Event General Journal Debit Credit >
Transcribed Image Text:Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2024 decided to change to the FIFO method. The inventory as reported at the end of 2023 using LIFO would have been $30 million higher using FIFO. Retained earnings reported at the end of 2022 and 2023 was $250 million and $270 million, respectively (reflecting the LIFO method). Those amounts reflecting the FIFO method would have been $260 million and $282 million, respectively. 2023 net income reported at the end of 2023 was $38 million (LIFO method) but would have been $40 million using FIFO. After changing to FIFO, 2024 net income was $46 million. Dividends of $9 million were paid each year. The tax rate is 25%. Required: 1. Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. 2. In the 2024-2023 comparative income statements, what will be the amounts of net income reported for 2023 and 2024? 3. Prepare the 2024-2023 retained earnings column of the comparative statements of shareholders' equity. Complete this question by entering your answers in the tabs below. Show Transcribed Text Journal entry worksheet < 1 Record the change in accounting principle. Note: Enter debits before credits. Event General Journal Debit Credit >
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