Vaughn Co. decides at the beginning of 2020 to adopt the FIFO method of inventory valuation. Vaughn had used the LIFO method for financial reporting since its inception on January 1, 2018, and had maintained records adequate to apply the FIFO method retrospectively. Vaughn concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The following table presents the effects of the change in accounting principles on inventory and cost of goods sold. Income taxes are ignored. Inventory Determined by Cost of Goods Sold Determined by Date LIFO Method FIFO Method LIFO Method FIFO Method January 1, 2018 $ 0 $ 0 $ 0 $ 0 December 31, 2018 100 8 800 892 December 31, 2019 200 220 940 828 December 31, 2020 350 410 1,100 1,060 Retained earnings reported under LIFO are as follows. Retained Earnings Balance December 31, 2018 $1,060 December 31, 2019 1,980 December 31, 2020 2,740 Other information: 1. For each year presented, sales are $2,900 and operating expenses are $1,040. 2. Vaughn provides two years of financial statements. Earnings per share information is not required. Prepare income statements under LIFO for 2018, 2019, and 2020. VAUGHN CO. Income Statement For the Year Ended December 31 LIFO 2018 2019 2020 select an income statement item $enter a dollar amount $enter a dollar amount $enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount enter a dollar amount select a closing name for this statement $enter a total net income or loss amount $enter a total net income or loss amount $enter a total net income or loss amount Prepare income statements under FIFO for 2018, 2019, and 2020. VAUGHN CO. Income Statement For the Year Ended December 31 FIFO 2018 2019 2020 select an income statement item $enter a dollar amount $enter a dollar amount $enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount enter a dollar amount select a closing name for this statement $enter a total net income or loss amount $enter a total net income or loss amount $enter a total net income or loss amount Prepare income statements reflecting the retrospective application of the accounting change from the LIFO method to the FIFO method for 2020 and 2019. VAUGHN CO. Income Statement For the Year Ended December 31 2019 2020 select an income statement item $enter a dollar amount $enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount select a closing name for this statement $enter a total net income or loss amount $enter a total net income or loss amount Prepare comparative retained earnings statements for 2019 and 2020 under FIFO. 2019 2020 select an opening name $enter a dollar amount $enter a dollar amount select between addition and deduction : select an item enter a dollar amount enter a dollar amount select a summarizing line for the first part $enter a total amount for the first part enter a total amount for the first part select an item enter a dollar amount enter a dollar amount select a closing name $enter a total amount $enter a total amount

Vaughn Co. decides at the beginning of 2020 to adopt the FIFO method of inventory valuation. Vaughn had used the LIFO method for financial reporting since its inception on January 1, 2018, and had maintained records adequate to apply the FIFO method retrospectively. Vaughn concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The following table presents the effects of the change in accounting principles on inventory and cost of goods sold. Income taxes are ignored. Inventory Determined by Cost of Goods Sold Determined by Date LIFO Method FIFO Method LIFO Method FIFO Method January 1, 2018 $ 0 $ 0 $ 0 $ 0 December 31, 2018 100 8 800 892 December 31, 2019 200 220 940 828 December 31, 2020 350 410 1,100 1,060 Retained earnings reported under LIFO are as follows. Retained Earnings Balance December 31, 2018 $1,060 December 31, 2019 1,980 December 31, 2020 2,740 Other information: 1. For each year presented, sales are $2,900 and operating expenses are $1,040. 2. Vaughn provides two years of financial statements. Earnings per share information is not required. Prepare income statements under LIFO for 2018, 2019, and 2020. VAUGHN CO. Income Statement For the Year Ended December 31 LIFO 2018 2019 2020 select an income statement item $enter a dollar amount $enter a dollar amount $enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount enter a dollar amount select a closing name for this statement $enter a total net income or loss amount $enter a total net income or loss amount $enter a total net income or loss amount Prepare income statements under FIFO for 2018, 2019, and 2020. VAUGHN CO. Income Statement For the Year Ended December 31 FIFO 2018 2019 2020 select an income statement item $enter a dollar amount $enter a dollar amount $enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount enter a dollar amount select a closing name for this statement $enter a total net income or loss amount $enter a total net income or loss amount $enter a total net income or loss amount Prepare income statements reflecting the retrospective application of the accounting change from the LIFO method to the FIFO method for 2020 and 2019. VAUGHN CO. Income Statement For the Year Ended December 31 2019 2020 select an income statement item $enter a dollar amount $enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount select an income statement item enter a dollar amount enter a dollar amount select a closing name for this statement $enter a total net income or loss amount $enter a total net income or loss amount Prepare comparative retained earnings statements for 2019 and 2020 under FIFO. 2019 2020 select an opening name $enter a dollar amount $enter a dollar amount select between addition and deduction : select an item enter a dollar amount enter a dollar amount select a summarizing line for the first part $enter a total amount for the first part enter a total amount for the first part select an item enter a dollar amount enter a dollar amount select a closing name $enter a total amount $enter a total amount

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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	Inventory Determined by	Cost of Goods Sold Determined by
Date	LIFO Method	FIFO Method	LIFO Method	FIFO Method
January 1, 2018	$ 0	$ 0	$ 0	$ 0
December 31, 2018	100	8	800	892
December 31, 2019	200	220	940	828
December 31, 2020	350	410	1,100	1,060

Retained earnings reported under LIFO are as follows.

		Retained Earnings Balance
December 31, 2018		$1,060
December 31, 2019		1,980
December 31, 2020		2,740

Other information:

1.		For each year presented, sales are $2,900 and operating expenses are $1,040.
2.		Vaughn provides two years of financial statements. Earnings per share information is not required.

Prepare income statements under LIFO for 2018, 2019, and 2020.

VAUGHN CO. Income Statement For the Year Ended December 31
LIFO
	2018	2019	2020
select an income statement item	$enter a dollar amount	$enter a dollar amount	$enter a dollar amount
select an income statement item	enter a dollar amount	enter a dollar amount	enter a dollar amount
select an income statement item	enter a dollar amount	enter a dollar amount	enter a dollar amount
select a closing name for this statement	$enter a total net income or loss amount	$enter a total net income or loss amount	$enter a total net income or loss amount

Prepare income statements under FIFO for 2018, 2019, and 2020.

VAUGHN CO. Income Statement For the Year Ended December 31
FIFO
	2018	2019	2020
select an income statement item	$enter a dollar amount	$enter a dollar amount	$enter a dollar amount
select an income statement item	enter a dollar amount	enter a dollar amount	enter a dollar amount
select an income statement item	enter a dollar amount	enter a dollar amount	enter a dollar amount
select a closing name for this statement	$enter a total net income or loss amount	$enter a total net income or loss amount	$enter a total net income or loss amount

Prepare income statements reflecting the retrospective application of the accounting change from the LIFO method to the FIFO method for 2020 and 2019.

VAUGHN CO. Income Statement For the Year Ended December 31
	2019	2020
select an income statement item	$enter a dollar amount	$enter a dollar amount
select an income statement item	enter a dollar amount	enter a dollar amount
select an income statement item	enter a dollar amount	enter a dollar amount
select a closing name for this statement	$enter a total net income or loss amount	$enter a total net income or loss amount

Prepare comparative retained earnings statements for 2019 and 2020 under FIFO.

	2019	2020
select an opening name	$enter a dollar amount	$enter a dollar amount
select between addition and deduction : select an item	enter a dollar amount	enter a dollar amount
select a summarizing line for the first part	$enter a total amount for the first part	enter a total amount for the first part
select an item	enter a dollar amount	enter a dollar amount
select a closing name	$enter a total amount	$enter a total amount

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