Sheridan Incorporated decided to change from the FIFO method of valuing inventory to the weighted average method in July 2020 to present more relevant information for its financial statement users. The cumulative effect on prior years of retrospective application of the new inventory costing method was determined to be $23,000 net of $14,500 tax. As prices were decreasing, cost of goods sold is lower and ending inventory higher for the preceding period. Retained earnings on January 1, 2020 was $251,500. Sheridan follows ASPE. Prepare a partial statement of retained earnings illustrating the adjusted balance of retained earnings. Sheridan Incorporated Statement of Retained Earnings (Partial) December 31, 2020For the month December 31, 2020For the year ended December 31, 2020 Net Income / (Loss)Cumulative Effect on Prior Years of Retrospective Application of New Inventory Costing MethodRetained Earnings, January 1, 2020, as Previously ReportedBalance January 1, 2020, as AdjustedCash Dividends $ Cumulative Effect on Prior Years of Retrospective Application of New Inventory Costing MethodNet Income / (Loss)Retained Earnings, January 1, 2020, as Previously ReportedCash DividendsBalance January 1, 2020, as Adjusted Retained Earnings, January 1, 2020, as Previously ReportedCumulative Effect on Prior Years of Retrospective Application of New Inventory Costing MethodBalance January 1, 2020, as AdjustedNet Income / (Loss)Cash Dividends $ eTextbook and Media List of Accounts Prepare the adjusting journal entry for the change in the accounting policy.

Sheridan Incorporated decided to change from the FIFO method of valuing inventory to the weighted average method in July 2020 to present more relevant information for its financial statement users. The cumulative effect on prior years of retrospective application of the new inventory costing method was determined to be $23,000 net of $14,500 tax. As prices were decreasing, cost of goods sold is lower and ending inventory higher for the preceding period. Retained earnings on January 1, 2020 was $251,500. Sheridan follows ASPE. Prepare a partial statement of retained earnings illustrating the adjusted balance of retained earnings. Sheridan Incorporated Statement of Retained Earnings (Partial) December 31, 2020For the month December 31, 2020For the year ended December 31, 2020 Net Income / (Loss)Cumulative Effect on Prior Years of Retrospective Application of New Inventory Costing MethodRetained Earnings, January 1, 2020, as Previously ReportedBalance January 1, 2020, as AdjustedCash Dividends $ Cumulative Effect on Prior Years of Retrospective Application of New Inventory Costing MethodNet Income / (Loss)Retained Earnings, January 1, 2020, as Previously ReportedCash DividendsBalance January 1, 2020, as Adjusted Retained Earnings, January 1, 2020, as Previously ReportedCumulative Effect on Prior Years of Retrospective Application of New Inventory Costing MethodBalance January 1, 2020, as AdjustedNet Income / (Loss)Cash Dividends $ eTextbook and Media List of Accounts Prepare the adjusting journal entry for the change in the accounting policy.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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List of Accounts

Prepare the adjusting journal entry for the change in the accounting policy. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

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Sheridan Incorporated Statement of Retained Earnings (Partial) December 31, 2020For the month December 31, 2020For the year ended December 31, 2020
Net Income / (Loss)Cumulative Effect on Prior Years of Retrospective Application of New Inventory Costing MethodRetained Earnings, January 1, 2020, as Previously ReportedBalance January 1, 2020, as AdjustedCash Dividends				$
Cumulative Effect on Prior Years of Retrospective Application of New Inventory Costing MethodNet Income / (Loss)Retained Earnings, January 1, 2020, as Previously ReportedCash DividendsBalance January 1, 2020, as Adjusted
Retained Earnings, January 1, 2020, as Previously ReportedCumulative Effect on Prior Years of Retrospective Application of New Inventory Costing MethodBalance January 1, 2020, as AdjustedNet Income / (Loss)Cash Dividends				$