Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1979. In 2024, the company decided to switch to the average cost method. Data for 2024 are as follows: Beginning inventory, FIFO (5,000 units @ $26) Purchases: 5,000 units@ $31 5,000 units@ $35 Cost of goods available for sale Sales for 2024 (5,000 units @ $62) $ 155,000 175,000 $ 130,000 330,000 $ 460,000 $ 310,000 Additional Information: a. The company's effective income tax rate is 25% for all years. b. If the company had used the average cost method prior to 2024, ending inventory for 2023 would have been $120,000. c. 10,000 units remained in inventory at the end of 2024. Required: 1. Ignoring income taxes, prepare the 2024 journal entry to adjust the accounts to reflect the average cost method. 2. What is the effect of the change in methods on 2024 net income?
Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1979. In 2024, the company decided to switch to the average cost method. Data for 2024 are as follows: Beginning inventory, FIFO (5,000 units @ $26) Purchases: 5,000 units@ $31 5,000 units@ $35 Cost of goods available for sale Sales for 2024 (5,000 units @ $62) $ 155,000 175,000 $ 130,000 330,000 $ 460,000 $ 310,000 Additional Information: a. The company's effective income tax rate is 25% for all years. b. If the company had used the average cost method prior to 2024, ending inventory for 2023 would have been $120,000. c. 10,000 units remained in inventory at the end of 2024. Required: 1. Ignoring income taxes, prepare the 2024 journal entry to adjust the accounts to reflect the average cost method. 2. What is the effect of the change in methods on 2024 net income?
Chapter1: Financial Statements And Business Decisions
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![Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1979. In
2024, the company decided to switch to the average cost method. Data for 2024 are as follows:
Beginning inventory, FIFO (5,000 units @ $26)
Purchases:
5,000 units @ $31
5,000 units @ $35
Cost of goods available for sale
Sales for 2024 (5,000 units @ $62)
Complete this question by entering your answers in the tabs below.
Required 1
Additional Information:
a. The company's effective income tax rate is 25% for all years.
b. If the company had used the average cost method prior to 2024, ending inventory for 2023 would have been $120,000.
c. 10,000 units remained in inventory at the end of 2024.
Required:
1. Ignoring income taxes, prepare the 2024 journal entry to adjust the accounts to reflect the average cost method.
2. What is the effect of the change in methods on 2024 net income?
Required 2
What is the effect of the change in methods on 2024 net income?
The effect of the change for the year 2024 is a
sold resulting in a
decrease
in income after tax.
$ 155,000
175,000
decrease
$ 130,000
< Required 1
330,000
$ 460,000
$ 310,000
increase
in income before taxes and a(n)
Required 2 >
in cost of goods](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fee781db8-8d7d-4b3e-97fd-18f1485f22ac%2F487f2c8f-6a1a-4669-a43a-87344bbdeafc%2Fgq3tcx_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1979. In
2024, the company decided to switch to the average cost method. Data for 2024 are as follows:
Beginning inventory, FIFO (5,000 units @ $26)
Purchases:
5,000 units @ $31
5,000 units @ $35
Cost of goods available for sale
Sales for 2024 (5,000 units @ $62)
Complete this question by entering your answers in the tabs below.
Required 1
Additional Information:
a. The company's effective income tax rate is 25% for all years.
b. If the company had used the average cost method prior to 2024, ending inventory for 2023 would have been $120,000.
c. 10,000 units remained in inventory at the end of 2024.
Required:
1. Ignoring income taxes, prepare the 2024 journal entry to adjust the accounts to reflect the average cost method.
2. What is the effect of the change in methods on 2024 net income?
Required 2
What is the effect of the change in methods on 2024 net income?
The effect of the change for the year 2024 is a
sold resulting in a
decrease
in income after tax.
$ 155,000
175,000
decrease
$ 130,000
< Required 1
330,000
$ 460,000
$ 310,000
increase
in income before taxes and a(n)
Required 2 >
in cost of goods
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