Zac Company has following information related to its financial statements in 2020: (1) Zac changed inventory cost methods to weighted-average method from LIFO at the end of 2020 for both financial statement and income tax purposes. The change will cause a $100,000 increase in the beginning inventory on January 1, 2021. (2) The physical inventory count on December 31, 2019, improperly double counted (overstated) merchandise costing $19,000 that had been temporarily stored in a public warehouse. Zac uses a periodic inventory system. (3) Effective January 1, 2020, the company changed the salvage value used in calculating depreciation for its factory. The factory cost $1,200,000 on January 1, 2010 and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $200,000. New evidence indicates that the salvage value will be no more than $50,000. Instructions: Assume the books have not been closed for 2020. Prepare journal entries showing the adjustments that are required, assuming the income tax rate is 25% for every year.
Zac Company has following information related to its financial statements in 2020:
(1) Zac changed inventory cost methods to weighted-average method from LIFO at the end of 2020 for both financial statement and income tax purposes. The change will cause a $100,000 increase in the beginning inventory on January 1, 2021.
(2) The physical inventory count on December 31, 2019, improperly double counted (overstated) merchandise costing $19,000 that had been temporarily stored in a public warehouse. Zac uses a periodic inventory system.
(3) Effective January 1, 2020, the company changed the salvage value used in calculating depreciation for its factory. The
Instructions:
Assume the books have not been closed for 2020. Prepare
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