2. Compare and explain the LC&NRV effect on each amount that was changed in part 1. (Negative answers should be indicated by aminus sign.)Item ChangedO DecreasedO No effectO IncreasedEffect3. This part of the question is not part of your Connect assignment.4-a. What effect (Increase, decrease, no effect) did the LC&NRV rule have on the cash flow for 2020?Amount ofChangeO DecreasedO IncreasedO No effect4-b. What will be the long-term effect on cash flow (Increase, decrease, no effect)? Smart Company prepared its annual financial statements dated December 31, 2020. The company applies the FIFO Inventory costingmethod; however, the company neglected to apply the LC&NRV valuation to the ending Inventory. The preliminary 2020 statement ofearnings follows:Sales revenueCost of salesBeginning inventoryPurchasesCost of goods available for saleEnding inventory (FIFO cost)Cost of salesGross profitOperating expensesPretax earningsIncome tax expense (38%)Net earningsIten QuantityABCD3,1801,630Cost of sales:Assume that you have been asked to restate the 2020 financial statements to Incorporate the LC&NRV Inventory valuation rule. Youhave developed the following data relating to the ending Inventory at December 31, 2020:Acquisition CostUnit Total$4.30 $13,6746.30 10,2692.80 20,2447.30 24,309$68,4967,2303,330Net RealizableValue$5.304.804.805.30$ 32,300197,000229,30068,496SMART COMPANYStatement of Earnings (LC&NRV Basis)For the Year Ended December 31, 2020$293,000160,804132, 19663,30068,89620,669$ 48,227Required:1. Restate the statement of earnings to reflect the valuation of the ending Inventory on December 31, 2020, at the LC&NRV. Apply theLC&NRV rule on an Item-by-item basis.

Name: 2. Compare and explain the LC&NRV effect on each amount that was chan
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Description: 2. Compare and explain the LC&NRV effect on each amount that was changed in part 1. (Negative answers should be indicated by aminus sign.)Item ChangedO DecreasedO No effectO IncreasedEffect3. This part of the question is not part of your Connect ass

Smart Company Statement of Earnings (LC & NRV Basis) For the Year Ended Dec 31, 2020 Sales…

Answered: Required: 1. Restate the statement of…

Business

Accounting

Required: 1. Restate the statement of earnings to reflect the valuation of the ending Inventory on December 31, 2020, at the LC&NRV. Apply the LC&NRV rule on an item-by-item basis.

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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3. How much is the cumulative effect of this change that should be reported in the income statement for the year ended December 31, 2021? On December 31, 2021, BLACK MAMBA Company appropriately changed its inventory valuation method to average cost method from FIFO for financial statement and income tax purposes. The change will result in a $180,000 increase in the beginning inventory at January 1, 2021. Assume an income tax rate of 30%. Your answer
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How much is the cumulative effect of this change that should be reported in the income statement for the year ended December 31, 2021?
During 2022, Emerald Inc. decided to change from FIFO method of inventory valuation to the weighted average method. January 1 inventory under FIFO 7,100,000 January 1 inventory under weighted average 7,700,000 December 31 inventory under FIFO 7,900,000 December 31inventory under weighted average 8,300,000 In the statement of retained earnings for 2022, what amount should be reported as the pretax cumulative effect of this accounting change? (A) 1,000,000 deduction (B) 1,000,000 addition C 600,000 deduction D 600,000 addition
A. FF Co. changed its inventory valuation from the FIFO cost method to the weighted averagemethod during 2020:FIFO Weighted AverageJanuary 1, 2020 inventory 4,000,000 4,500,000December 31, 2020 inventory 4,800,000 5,100,000Required: Ignoring income taxes,1. Prepare the journal entry to adjust the 2020 opening balance of retained earnings account.2. Determine the net income under the weighted average method assuming that the netincome under FIFO was determined to be P900,000.
Volata Company began operations on January 1, 2019. In the second quarter of 2020, it adopted the FIFO method of inventory valuation. In the past, it used the LIFO method. The company’s interim income statements as originally reported under the LIFO method follow: 2019 2020 1stQ 2ndQ 3rdQ 4thQ 1stQ Sales $ 14,000 $ 16,000 $ 18,000 $ 20,000 $ 22,000 Cost of goods sold (LIFO) 4,400 5,400 6,200 7,400 8,900 Operating expenses 2,400 2,600 3,000 3,400 3,600 Income before income taxes $ 7,200 $ 8,000 $ 8,800 $ 9,200 $ 9,500 Income taxes (25%) 1,800 2,000 2,200 2,300 2,375 Net income $ 5,400 $ 6,000 $ 6,600 $ 6,900 $ 7,125 If the FIFO method had been used since the company began operations, cost of goods sold in each of the previous quarters would have been as follows: 2019 2020 1stQ 2ndQ 3rdQ 4thQ…
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3. How much is the cumulative effect of this change that should be reported in the income statement for the year ended December 31, 2021?