The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost method to the FIFO cost methodat the beginning of 2024. At December 31, 2023, inventories were $122,000 (average cost basis) and were $126,000 a year earlier.Cecil-Booker's accountants determined that the inventories would have totaled $159,000 at December 31, 2023, and $164,000 atDecember 31, 2022, if determined on a FIFO basis. A tax rate of 25% is in effect for all years.One hundred thousand common shares were outstanding each year. Income from continuing operations was $420,000 in 2023 and$545,000 in 2024. There were no discontinued operations either year.Required:1. Prepare the journal entry at January 1, 2024, to record the change in accounting principle. (All tax effects should be reflected inthe deferred tax liability account.)2. Prepare the 2024-2023 comparative income statements beginning with income from continuing operations (adjusted for anyrevisions). Include per share amounts.

The record of day-to-day transactions in the books of accounts is called journal entries. In a…

Answered: Required: 1. Prepare the journal entry…

Required: 1. Prepare the journal entry at January 1, 2024, to the deferred tax liability account.) 2. Prepare the 2024-2023 comparative income st revisions). Include per share amounts.

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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