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 (5,300 units @ $32) Purchases: 5,300 units @ $38 5,300 units @ $42 Cost of goods available for sale. Sales for 2024 (8,000 units @ $70) 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 $132,500. c. 7,900 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 $ 201,400 222,600 in income after tax. decrease $ 169,600 424,000 $ 593,600 $ 560,000 increase in income before taxes and a(n) in cost of goods
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 (5,300 units @ $32) Purchases: 5,300 units @ $38 5,300 units @ $42 Cost of goods available for sale. Sales for 2024 (8,000 units @ $70) 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 $132,500. c. 7,900 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 $ 201,400 222,600 in income after tax. decrease $ 169,600 424,000 $ 593,600 $ 560,000 increase in income before taxes and a(n) in cost of goods
Chapter1: Financial Statements And Business Decisions
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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 (5,300 units @ $32)
Purchases:
5,300 units @ $38
5,300 units @ $42
Cost of goods available for sale
Sales for 2024 (8,000 units @ $70)
Additional Information:
Complete this question by entering your answers in the tabs below.
Required 1
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 $132,500.
c. 7,900 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
$ 201,400
222,600
in income after tax.
decrease
$ 169,600
424,000
$ 593,600
$ 560,000
increase
in income before taxes and a(n)
in cost of goods
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