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Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Will Flay apply the LIFO cost method retrospectively or apply the LIFO cost method prospectively? Flay will apply the LIFO cost method < Required 1 beginning in 2021. beginning in 2022. beginning in 2023. Required 1 Required 2 Required 3 Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. (Ignore income taxes.) Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). View transaction list Journal entry worksheet 1 Record the change in accounting principle. Note: Enter debits before credits. Event 1 General Journal Debit Credit Record entry Clear entry View general journal

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Will Flay apply the LIFO cost method retrospectively or apply the LIFO cost method prospectively? Flay will apply the LIFO cost method < Required 1 beginning in 2021. beginning in 2022. beginning in 2023. Required 1 Required 2 Required 3 Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. (Ignore income taxes.) Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). View transaction list Journal entry worksheet 1 Record the change in accounting principle. Note: Enter debits before credits. Event 1 General Journal Debit Credit Record entry Clear entry View general journal

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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Flay Foods has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2024, Flay decided to change to the LIFO method. As a result of the change, net income in 2024 was $88 million. If the company had used LIFO in 2023, its cost of goods sold would have been higher by $7 million that year. Flay’s records of inventory purchases and sales are not available for 2022 and several previous years. Last year, Flay reported the following net income amounts in its comparative income statements:

($ in millions) 2021 2022 2023
Net income $ 88 $ 90 $ 92

Required:

1. Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. (Ignore income taxes.)

2. Will Flay apply the LIFO cost method retrospectively or apply the LIFO cost method prospectively?

3. What amounts will Flay report for net income in its 2022–2024 comparative income statements?

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Will Flay apply the LIFO cost method retrospectively or apply the LIFO cost method prospectively? Flay will apply the LIFO cost method < Required 1 beginning in 2021. beginning in 2022. beginning in 2023.
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Will Flay apply the LIFO cost method retrospectively or apply the LIFO cost method prospectively? Flay will apply the LIFO cost method < Required 1 beginning in 2021. beginning in 2022. beginning in 2023.
Required 1 Required 2 Required 3 Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. (Ignore income taxes.) Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). View transaction list Journal entry worksheet 1 Record the change in accounting principle. Note: Enter debits before credits. Event 1 General Journal Debit Credit Record entry Clear entry View general journal
Transcribed Image Text:Required 1 Required 2 Required 3 Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. (Ignore income taxes.) Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). View transaction list Journal entry worksheet 1 Record the change in accounting principle. Note: Enter debits before credits. Event 1 General Journal Debit Credit Record entry Clear entry View general journal
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