Change in Inventory Pricing MethodThis represents a change from last-in, first-out to first-in, first-out method of inventory pricing. (cumulative effect on change of accounting policy)Required: Adjusting entry You have been engaged to audit FAR EASTERN COMPANY, a new client, for the year ended,December 31, 2021. The company prepared the trial balance set forth below, as of December 31,2021,theclose of its second year of operations.Account TitlesUnadjusted Trial BalanceDebitCreditCash112,600.00Marketable Securities72,000.00Allowance for decline in value of securitiesAccounts Receivable - Trade1,758,220.00Allowance for doubtful accounts40,000.00Accounts Receivable - OthersAdvances to affiliate48,000.00250,000.00Inventory, December 31, 2021Property, Plant and EquipmentAccumulated Depreciation2,770,000.00Accounts PayableIncome Tax PayableLong-term DebtOrdinary Share CapitalRetained EarningsRevaluation IncrementSalesCost of Sales2,269,604.00170,622.00Operating ExpensesOther Charges100,000.00Provision for Income Taxes (35%)80,954.00Discontinued Operations (Net)6,500.00Cumulative Effect of Change in Accounting Principle (Net)13,000.007,691,500.0020,000.0068,100.001,240,000.00408,616.0071,260.0060,000.002,042,000.00770,000.00240,000.002,771,524.007,691,500.00

Name: Change in Inventory Pricing MethodThis represents a change from last-i
Uploaded: 2024-03-20T06:32:37.000Z
Channel: Bartleby
Description: Change in Inventory Pricing MethodThis represents a change from last-in, first-out to first-in, first-out method of inventory pricing. (cumulative effect on change of accounting policy)Required: Adjusting entry You have been engaged to audit FAR EAST

Answered: Image /qna-images/answer/255ce778-9a1c-4d3c-aa3a-62796081d84a.jpg

Answered: Required: Adjusting entry

Business

Accounting

Required: Adjusting entry

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: inventory cOsting method but did not compare the cost of its ending inventory to its market value…

A: Last in first out (LIFO) which reflects the process of determining the inventory cost on the basis…

Q: Cost of goods sold is determined only at the end of the accounting period in a perpetual inventory…

A: Periodic inventory system :The periodic inventory system is a method of ascertaining inventory by…

Q: Defining Chapter Terms Terms and phrases relating to concepts discussed in this chapter along with…

A: Key Inventory terms and phrases Description of terms and phrases 1. Net realizable value h.…

Q: Prepare a memorandum containing responses to the following items. a. Describe the cost flow…

A: a.

Q: Indicate the effects of inventory errors on the financial statements

A: Solution- 1-A merchandising company must be sure that it has properly valued its ending inventory.…

Q: 1. Journalize the adjustment for inventory shrinkage. 2. Journalize the adjustment for estimated…

A: Given: Merchandise inventory = $ 5,200 Inventory on June 30, 2018 = $ 4,900 Amount of Sold…

Q: Describe Change in Inventory Method and Inventory Errors.

A: Change in Inventory method: Inventory change is the difference between the amount of last period's…

Q: Question: Which of the following inventory valuation methods assumes that the most recently acquired…

A: The question is asking to identify the inventory valuation method that assumes the most recently…

Q: Explain the appropriate accounting treatment required when a change in inventory method is made.

A: Definition: Change in inventory method: Change in inventory method is said to be the difference…

Q: nventory information for Part 311 of Sunland Corp. discloses the following information for the month…

A: Periodic Inventory :- periodic inventory system is a mechanism for mesuring cost of goods sold and…

Q: Required information [The following information applies to the questions displayed below.] A company…

A: Evaluating Net Realizable Value is essential for proper financial reporting because it prevents…

Q: 11. What is the effect on cost of goods sold, gross profit, and net income if ending mer- chandise…

A: Error in inventory recording can be cancelled or we can say nullified within two consecutive…

Q: Discuss how a change to the LIFO method of inventory valuation is handled when it is impracticable…

Q: t is possible to calculate shrinkage Multiple Choice a)in Periodic Inventory Accounting but not…

A: Inventory shrinkage is the additional amount of inventory in the accounting records in comparison to…

Q: Physical counts of inventory: O a. Must be taken at least once a month. O b. Are not necessary under…

A: A physical count of inventory means having an actual count of inventory despite maintaining…

Q: Which inventory system would allow a business to determine inventory shrinkage (breakage, theft,…

A: Inventory Systems: Inventory systems are classified as periodic or perpetual based on how invetory…

Q: Inventory valuation is the cost associated with an entity's inventory at the end of a reporting…

A: Introduction: Inventory is a type of asset that is sold during daily business operations.. Inventory…

Q: Need to know how to get ending inventory for JAFFE on a corrected income statement for NPV

A: This question is related to the ending inventory before moving into the question first we know about…

Q: When a company changes its inventory method to LIFO, an exception is made for the way accounting…

A: Explain the difference in the accounting treatment of a change to the LIFO inventory method from…

Q: Under a perpetual inventory system: Multiple Choice Cost of good sold is recorded with a…

A: Inventory management is a method of acquiring, keeping, and selling inventory, which includes both…

Q: A periodic inventory system does not continually modify inventory amounts, but instead adjusts for…

A: The inventory under the periodic inventory system does not modify continuously but at the end. The…

Q: Identify which of the following statement is correct for perpetual inventory system? Under the…

A: The objective of the question is to identify the correct statement about the perpetual inventory…

Q: Question: Which of the following methods of inventory valuation assumes that the most recent…

A: Inventory means the item in which the business deals. inventory has to be valued at the end of…

Q: If consignment inventory is unsold at the end of the period, who reports the ending inventory on the…

A: Consignment inventory is a property of consignor and the consignor will have all the rights with…

Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

Topic Video

Question

Change in Inventory Pricing Method

This represents a change from last-in, first-out to first-in, first-out method of inventory pricing. (cumulative effect on change of accounting policy)

Required: Adjusting entry

You have been engaged to audit FAR EASTERN COMPANY, a new client, for the year ended,
December 31, 2021. The company prepared the trial balance set forth below, as of December 31,2021,the
close of its second year of operations.
Account Titles
Unadjusted Trial Balance
Debit
Credit
Cash
112,600.00
Marketable Securities
72,000.00
Allowance for decline in value of securities
Accounts Receivable - Trade
1,758,220.00
Allowance for doubtful accounts
40,000.00
Accounts Receivable - Others
Advances to affiliate
48,000.00
250,000.00
Inventory, December 31, 2021
Property, Plant and Equipment
Accumulated Depreciation
2,770,000.00
Accounts Payable
Income Tax Payable
Long-term Debt
Ordinary Share Capital
Retained Earnings
Revaluation Increment
Sales
Cost of Sales
2,269,604.00
170,622.00
Operating Expenses
Other Charges
100,000.00
Provision for Income Taxes (35%)
80,954.00
Discontinued Operations (Net)
6,500.00
Cumulative Effect of Change in Accounting Principle (Net)
13,000.00
7,691,500.00
20,000.00
68,100.00
1,240,000.00
408,616.00
71,260.00
60,000.00
2,042,000.00
770,000.00
240,000.00
2,771,524.00
7,691,500.00

Definition Definition Entries made at the end of every accounting period to precisely replicate the expenses and revenue of the current period. This is also known as end of period adjustment. It can also refer to financial reporting that corrects errors made previously in the accounting period. Every adjustment entry affects at least one real account and one nominal account.

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!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions

Please Solve In 15mins I will Thumbs-up promise
company will be affected by the changes in inventory method
Which of the following is not affected by an error related to ending inventory? Multiple Choice O O O O O Sales. Net income. Current assets. Gross profit. Cost of goods sold.
Identify which of the following statement is correct for perpetual inventory system? Under the perpetual Inventory system, on the purchase of Inventory purchase account is debited. When valuing ending Inventory under a perpetual Inventory system, oldest units purchased during the period using FIFO are allocated to the cost of goods sold when units are sold. When valuing ending Inventory under a perpetual Inventory system, weighted average cost method requires that a new weighted average unit cost be calculated after every sale. 09/03/2024 15:01 When valuing ending Inventory under a perpetual inventory system, valuation using weighted average is the same as the valuation using weighted average under the periodic Inventory system.
Identify which of the following statement is correct for perpetual inventory system? When valuing ending inventory under a perpetual inventory system, weighted average cost method requires that a new weighted average unit cost be calculated after every sale. When valuing ending inventory under a perpetual inventory system, valuation using weighted average is the same as the valuation using weighted average under the periodic inventory system. When valuing ending inventory under a perpetual inventory system, oldest units purchased during the period using FIFO are allocated to the cost of goods sold when units are sold. 5 Under the perpetual inventory system, on the purchase of inventory purchase account is debited. 7
For each change or error below, indicate how it would be accounted for. 1. Change due to understatement of inventory. options: A.) accounted for prospectively b.) prior period adjustment 2. change from direct write-off to allowance method of accounting for bad debts. Options: a.) accounted for retrospectively b.) prior period adjustment
Handwriting not allow please
Question: Which of the following inventory valuation methods typically results in higher ending inventory value during periods of rising prices? A) FIFO (First-In-First-Out) method B) LIFO (Last-In-First-Out) method C) Weighted Average method D) Specific Identification method