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In 2020, Bevins Company decided to change from LIFO to FIFO due to better representation of the flow of inventory and costs. Bevins started the business in 2018. Bevin’s tax rate is 35%. The following analysis was provided by management: Ending Inventory LIFO FIFO Net Income 12/31/2018 $375,650 $405,900 975,000 12/31/2019 $360,450 $410,750 1,350,000 12/31/2020 $365,975 $445,775 1,389,500

In 2020, Bevins Company decided to change from LIFO to FIFO due to better representation of the flow of inventory and costs. Bevins started the business in 2018. Bevin’s tax rate is 35%. The following analysis was provided by management: Ending Inventory LIFO FIFO Net Income 12/31/2018 $375,650 $405,900 975,000 12/31/2019 $360,450 $410,750 1,350,000 12/31/2020 $365,975 $445,775 1,389,500

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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In 2020, Bevins Company decided to change from LIFO to FIFO due to better representation of the flow of inventory and costs. Bevins started the business in 2018. Bevin’s tax rate is 35%. The following analysis was provided by management:
Ending Inventory
LIFO
FIFO
Net Income
12/31/2018 $375,650 $405,900 975,000
12/31/2019 $360,450 $410,750 1,350,000
12/31/2020 $365,975 $445,775 1,389,500
       
 
Required:
1. Prepare the journal entry necessary to record the change.
2. What amount of net income would Bevins report in 2018, 2019, and 2020?

 

General Journal In rat How does grading work? DATE 1 Dec. 31 Inventory 2 3 Retained Earnings Deferred Tax Liability GENERAL JOURNAL ACCOUNT TITLE POST. REF. Shaded cells have feedback. Xd cells have feedback PAGE 1 Score: 33/37 DEBIT CREDIT 50,300.00 Points: 17,605.00 32,695.00 6.24/7 3
Transcribed Image Text:General Journal In rat How does grading work? DATE 1 Dec. 31 Inventory 2 3 Retained Earnings Deferred Tax Liability GENERAL JOURNAL ACCOUNT TITLE POST. REF. Shaded cells have feedback. Xd cells have feedback PAGE 1 Score: 33/37 DEBIT CREDIT 50,300.00 Points: 17,605.00 32,695.00 6.24/7 3
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