Goddard Company has used the FIFO method of inventory valuation since it began operations in 2018. Goddard decided to change to the average cost method for determining inventory costs at the beginning of 2021. The following schedule shows year-end inventory balances under the FIFO and average cost methods: Year FIFO Average Cost 2018 $45,000 $54,000 2019 78,000 71,000 2020 83,000 78,000 Required:1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method.2. How much higher or lower would cost of goods sold be in the 2020 revised income statement?
Goddard Company has used the FIFO method of
Year FIFO Average Cost
2018 $45,000 $54,000
2019 78,000 71,000
2020 83,000 78,000
Required:
1. Ignoring income taxes, prepare the 2021
2. How much higher or lower would cost of goods sold be in the 2020 revised income statement?
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
