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Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Wolfgang decided to change to the LIFO method. Net income in 2021 was correctly stated as $114 million. If the company had used LIFO in 2020, its cost of goods sold would have been higher by $8 million that year. Company accountants are able to determine that the cumulative net income for all years prior to 2020 would have been lower by $35 million if LIFO had been used all along, but have insufficient information to determine specific effects of using LIFO in 2019. Last year, Wolfgang reported the following net income amounts in its comparative income statements: ($ in millions) Net income Required: 1. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) 3. What amounts will Wolfgang report for net income in its 2019-2021 comparative income statements? 2018 2019 2020 $114 $116 $118 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 3 Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) General Journal No 1 Event 1 Retained earnings Inventory < Required 1 Required 3 > Debit 43 Credit 43

Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Wolfgang decided to change to the LIFO method. Net income in 2021 was correctly stated as $114 million. If the company had used LIFO in 2020, its cost of goods sold would have been higher by $8 million that year. Company accountants are able to determine that the cumulative net income for all years prior to 2020 would have been lower by $35 million if LIFO had been used all along, but have insufficient information to determine specific effects of using LIFO in 2019. Last year, Wolfgang reported the following net income amounts in its comparative income statements: ($ in millions) Net income Required: 1. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) 3. What amounts will Wolfgang report for net income in its 2019-2021 comparative income statements? 2018 2019 2020 $114 $116 $118 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 3 Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) General Journal No 1 Event 1 Retained earnings Inventory < Required 1 Required 3 > Debit 43 Credit 43

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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Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Wolfgang decided to change to the LIFO method. Net income in 2021 was correctly stated as $114 million. If the company had used LIFO in 2020, its cost of goods sold would have been higher by million that year. Company accountants are able to determine that the cumulative net income for all years prior to 2020 would have been lower by $35 million if LIFO had been used all along, but have insufficient information to determine specific effects of using LIFO in 2019. Last year, Wolfgang reported the following net income amounts in its comparative income statements: ($ in millions) Net income Required: 1. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) 3. What amounts will Wolfgang report for net income in its 2019-2021 comparative income statements? Required 1 2018 2019 2020 $114 $116 $118 Complete this question by entering your answers in the tabs below. No 1 Required 3 Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) General Journal Event 1 > Answer is not complete. Retained earnings Inventory < Required 1 Required 3 > Debit 43✔ Credit 43 ✔
Transcribed Image Text:Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Wolfgang decided to change to the LIFO method. Net income in 2021 was correctly stated as $114 million. If the company had used LIFO in 2020, its cost of goods sold would have been higher by million that year. Company accountants are able to determine that the cumulative net income for all years prior to 2020 would have been lower by $35 million if LIFO had been used all along, but have insufficient information to determine specific effects of using LIFO in 2019. Last year, Wolfgang reported the following net income amounts in its comparative income statements: ($ in millions) Net income Required: 1. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) 3. What amounts will Wolfgang report for net income in its 2019-2021 comparative income statements? Required 1 2018 2019 2020 $114 $116 $118 Complete this question by entering your answers in the tabs below. No 1 Required 3 Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) General Journal Event 1 > Answer is not complete. Retained earnings Inventory < Required 1 Required 3 > Debit 43✔ Credit 43 ✔
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