! Required information [The following information applies to the questions displayed below.] Shown below are net income amounts as they would be determined by Weihrich Steel Company by each of three different inventory costing methods ($ in thousands). Pre-2020 2020 FIFO $2,980 840 $3,820 Average Cost $2,720 510 $3,230 LIFO $2,460 585 $3,045 3. Assume that Weihrich used FIFO before 2021, and then in 2021 decided to switch to LIFO cost. Weihrich's records of inventory purchases and sales are not available for several previous years. Therefore, the pre-2020 LIFO information ($2,460) is not available. However, Weihrich does have the information needed to apply LIFO on a prospective basis beginning in 2020. Prepare the journal entry to record the change in accounting principle. (Ignore income tax effects.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in thousands.)
! Required information [The following information applies to the questions displayed below.] Shown below are net income amounts as they would be determined by Weihrich Steel Company by each of three different inventory costing methods ($ in thousands). Pre-2020 2020 FIFO $2,980 840 $3,820 Average Cost $2,720 510 $3,230 LIFO $2,460 585 $3,045 3. Assume that Weihrich used FIFO before 2021, and then in 2021 decided to switch to LIFO cost. Weihrich's records of inventory purchases and sales are not available for several previous years. Therefore, the pre-2020 LIFO information ($2,460) is not available. However, Weihrich does have the information needed to apply LIFO on a prospective basis beginning in 2020. Prepare the journal entry to record the change in accounting principle. (Ignore income tax effects.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in thousands.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![!
Required information
[The following information applies to the questions displayed below.]
Shown below are net income amounts as they would be determined by Weihrich Steel Company by each of three different
inventory costing methods ($ in thousands).
Pre-2020
2020
FIFO
$2,980
840
$3,820
Average Cost
$2,720
510
$3,230
LIFO
$2,460
585
$3,045
3. Assume that Weihrich used FIFO before 2021, and then in 2021 decided to switch to LIFO cost. Weihrich's records of inventory
purchases and sales are not available for several previous years. Therefore, the pre-2020 LIFO information ($2,460) is not available.
However, Weihrich does have the information needed to apply LIFO on a prospective basis beginning in 2020. Prepare the journal
entry to record the change in accounting principle. (Ignore income tax effects.) (If no entry is required for a transaction/event, select
"No journal entry required" in the first account field. Enter your answers in thousands.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F87f377c8-556b-40c3-ad73-583aac17d9d0%2Faa41bf1b-55d5-426d-bb6d-869ebf30c570%2Fhj24thd_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
[The following information applies to the questions displayed below.]
Shown below are net income amounts as they would be determined by Weihrich Steel Company by each of three different
inventory costing methods ($ in thousands).
Pre-2020
2020
FIFO
$2,980
840
$3,820
Average Cost
$2,720
510
$3,230
LIFO
$2,460
585
$3,045
3. Assume that Weihrich used FIFO before 2021, and then in 2021 decided to switch to LIFO cost. Weihrich's records of inventory
purchases and sales are not available for several previous years. Therefore, the pre-2020 LIFO information ($2,460) is not available.
However, Weihrich does have the information needed to apply LIFO on a prospective basis beginning in 2020. Prepare the journal
entry to record the change in accounting principle. (Ignore income tax effects.) (If no entry is required for a transaction/event, select
"No journal entry required" in the first account field. Enter your answers in thousands.)
Expert Solution
Step 1
INVENTORY VALUATION
Inventory Valuation is a Method of Calculation of Value of Inventory at the End of the Period.
Inventory Valuation is the Accounting Process of Assigning Value to a Company's Inventory.
There are 3 Main Method of Valuation of inventory :—
-
- First in First Out (FIFO)
- Last In First Out (LIFO)
- Weighted Average Cost Method
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