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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 2021, the company decided to switch to the average cost m Beginning Inventory, FIFO (5,500 units @ $27) $ 148,500 Purchases: 5,500 units @ $33 5,500 units @ $37 Cost of goods available for sale Sales for 2018 (8,000 units @ $75) $ 181,500 203,500 385,000 S 533,500 $ 600,000 Additional Information: 1. The company's effective Income tax rate is 25% for all years. 2. If the company had used the average cost method prior to 2021, ending inventory for 2020 would have been $126,500. 3. 8,500 units remained in inventory at the end of 2021. Required: 1. Jgnoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method.

Rockwell Corporation uses a periodic Inventory system and has used the FIFO cost method since inception of the company in 1979. In 2021, the company decided to switch to the average cost m Beginning Inventory, FIFO (5,500 units @ $27) $ 148,500 Purchases: 5,500 units @ $33 5,500 units @ $37 Cost of goods available for sale Sales for 2018 (8,000 units @ $75) $ 181,500 203,500 385,000 S 533,500 $ 600,000 Additional Information: 1. The company's effective Income tax rate is 25% for all years. 2. If the company had used the average cost method prior to 2021, ending inventory for 2020 would have been $126,500. 3. 8,500 units remained in inventory at the end of 2021. Required: 1. Jgnoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 2021, the company decided to switch to the average cost method. Data for 2021 are as follows: Beginning Inventory, FIFO (5,500 units @ $27) Purchases: 5,500 units @ $33 5,500 units @ $37 Cost of goods available for sale Sales for 2018 (8,000 units @ $75) $ 181,500 203,500 S 148,500 385,000 S 533,500 S 600,000 Additional Information: 1. The company's effective income tax rate is 25% for all years. 2. If the company had used the average cost method prior to 2021, ending inventory for 2020 would have been $126,500. 3. 8,500 units remained in inventory at the end of 2021. Required: 1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method. • Record adjustment to reflect average cost method. 2. What is the effect of the change in methods on 2021 net income? The effect of the change for the year 2021 is a sold resulting in a decrease OR increase in income after tax. decrease OR increase decrease OR increase in cost of goods in income before taxes and a(n)
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 2021, the company decided to switch to the average cost method. Data for 2021 are as follows: Beginning Inventory, FIFO (5,500 units @ $27) Purchases: 5,500 units @ $33 5,500 units @ $37 Cost of goods available for sale Sales for 2018 (8,000 units @ $75) $ 181,500 203,500 S 148,500 385,000 S 533,500 S 600,000 Additional Information: 1. The company's effective income tax rate is 25% for all years. 2. If the company had used the average cost method prior to 2021, ending inventory for 2020 would have been $126,500. 3. 8,500 units remained in inventory at the end of 2021. Required: 1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method. • Record adjustment to reflect average cost method. 2. What is the effect of the change in methods on 2021 net income? The effect of the change for the year 2021 is a sold resulting in a decrease OR increase in income after tax. decrease OR increase decrease OR increase in cost of goods in income before taxes and a(n)
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