Required: 1. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) 3. What amounts will Flay report for net income in its 2019-2021 comparative income statements?
Required: 1. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) 3. What amounts will Flay report for net income in its 2019-2021 comparative income statements?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Answer me within 45 min please I will give you upvote thankyou...
![Exercise 20-8 (Algo) Change in inventory methods; FIFO method to the LIFO method [LO20-3]
Flay Foods has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021,
Flay decided to change to the LIFO method. As a result of the change, net income in 2021 was $87 million. If the company had used
LIFO in 2020, its cost of goods sold would have been higher by $5 million that year. Flay's records of inventory purchases and sales
are not available for 2019 and several previous years. Last year, Flay reported the following net income amounts in its comparative
income statements:
($ in millions) 2018 2019 2020
Net income
$87 $89 $91
Required:
1. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.)
3. What amounts will Flay report for net income in its 2019-2021 comparative income statements?
Complete this question by entering your answers in the tabs below.
Required 1. Required 3
Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) (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
< Prev
6 of 9
Next >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fded2bb9e-8d1c-42ec-a898-d412c9b00479%2F63313355-a1e3-42eb-885a-019f5d505597%2Fxrhbdb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 20-8 (Algo) Change in inventory methods; FIFO method to the LIFO method [LO20-3]
Flay Foods has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021,
Flay decided to change to the LIFO method. As a result of the change, net income in 2021 was $87 million. If the company had used
LIFO in 2020, its cost of goods sold would have been higher by $5 million that year. Flay's records of inventory purchases and sales
are not available for 2019 and several previous years. Last year, Flay reported the following net income amounts in its comparative
income statements:
($ in millions) 2018 2019 2020
Net income
$87 $89 $91
Required:
1. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.)
3. What amounts will Flay report for net income in its 2019-2021 comparative income statements?
Complete this question by entering your answers in the tabs below.
Required 1. Required 3
Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) (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
< Prev
6 of 9
Next >
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education