Homework Help is Here – Start Your Trial Now!
Business
Accounting
Gordon Company started operations on January 1, 2015, and has used the FIFO method of inventory valuation since its inception. In 2021, it decides to switch to the average-cost method. You are provided with the following information.   Net Income Retained Earnings (Ending Balance)   Under FIFO Under Average-Cost Under FIFO 2015 $100,000 $  90,000 $100,000 2016     70,000     65,000   160,000 2017     90,000     80,000   235,000 2018   120,000   130,000   340,000 2019   300,000   290,000   590,000 2020   305,000   310,000   780,000 Instructions a.    What is the beginning retained earnings balance at January 1, 2017, if Gordon prepares comparative financial statements starting in 2017? b.    What is the beginning retained earnings balance at January 1, 2020, if Gordon prepares comparative financial statements starting in 2020? c.    What is the beginning retained earnings balance at January 1, 2021, if Gordon prepares single-period financial statements for 2021? d.    What is the net income reported by Gordon in the 2020 income statement if it prepares comparative financial statements starting with 2018?

Gordon Company started operations on January 1, 2015, and has used the FIFO method of inventory valuation since its inception. In 2021, it decides to switch to the average-cost method. You are provided with the following information.   Net Income Retained Earnings (Ending Balance)   Under FIFO Under Average-Cost Under FIFO 2015 $100,000 $  90,000 $100,000 2016     70,000     65,000   160,000 2017     90,000     80,000   235,000 2018   120,000   130,000   340,000 2019   300,000   290,000   590,000 2020   305,000   310,000   780,000 Instructions a.    What is the beginning retained earnings balance at January 1, 2017, if Gordon prepares comparative financial statements starting in 2017? b.    What is the beginning retained earnings balance at January 1, 2020, if Gordon prepares comparative financial statements starting in 2020? c.    What is the beginning retained earnings balance at January 1, 2021, if Gordon prepares single-period financial statements for 2021? d.    What is the net income reported by Gordon in the 2020 income statement if it prepares comparative financial statements starting with 2018?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Gordon Company started operations on January 1, 2015, and has used the FIFO method of inventory valuation since its inception. In 2021, it decides to switch to the average-cost method. You are provided with the following information.

 
Net Income
Retained Earnings (Ending Balance)
 
Under FIFO
Under Average-Cost
Under FIFO
2015
$100,000
$  90,000
$100,000
2016
    70,000
    65,000
  160,000
2017
    90,000
    80,000
  235,000
2018
  120,000
  130,000
  340,000
2019
  300,000
  290,000
  590,000
2020
  305,000
  310,000
  780,000

Instructions

a.    What is the beginning retained earnings balance at January 1, 2017, if Gordon prepares comparative financial statements starting in 2017?

b.    What is the beginning retained earnings balance at January 1, 2020, if Gordon prepares comparative financial statements starting in 2020?

c.    What is the beginning retained earnings balance at January 1, 2021, if Gordon prepares single-period financial statements for 2021?

d.    What is the net income reported by Gordon in the 2020 income statement if it prepares comparative financial statements starting with 2018?

 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 3 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Financial Reporting in Hyperinflationary Economies
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS