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 January1, 2024, management decided to change from the average inventory costing method to the FIFO inventory costing method at each of its outlets. The following tablepresents information concerning the change. The income tax rate for all years is 25 %. Income before Income Tax FIFO Average Cost Difference Before 2023 $ 23 million $16 million $ 7 million 2023 24 million 13 million 11 million 2024 18 million 17 million 1 million Required: 1. Prepare the journal entry to record the change in accountingprinciple. 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 comparativestatements of shareholders' equity assuming cash dividends were $6.00 million each year and that no dividends were paid prior to 2023.

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Description: 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 January1, 2024, management decided to change from the average inventory costing meth

Inventory costing, also known as inventory cost accounting, is the process in which companies…

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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 to 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 FIFO Average Cost Difference Before 2023 $ 23 million S 16 million $7 million 2023 24 million 13 million 11 million 2024 18 million 17 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 were $6.00 million each year and that no dividends were paid prior to 2023.

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 to 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 FIFO Average Cost Difference Before 2023 $ 23 million S 16 million $7 million 2023 24 million 13 million 11 million 2024 18 million 17 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 were $6.00 million each year and that no dividends were paid prior to 2023.

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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