First-in First-Out method (FIFO) In First-in-First-Out method, the cost of initial purchased items is sold first. The ending inventory values are those items that include recent purchased items. In Last-in-First-Out method , the cost of last purchased items is sold first. The value of the closing stock consists of the initial purchased items. To report The change incurred due to change of inventory method.

Question

Want to see the full answer?

Answer 1

Question

Chapter 13, Problem 13.3BE

To determine

First-in First-Out method (FIFO)

In First-in-First-Out method, the cost of initial purchased items is sold first. The ending inventory values are those items that include recent purchased items.

In Last-in-First-Out method, the cost of last purchased items is sold first. The value of the closing stock consists of the initial purchased items.

To report

The change incurred due to change of inventory method.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

The management of Jones Company has asked its accounting department to describe the effect upon the company’s financial position and its income statements of accounting for inventories on the LIFO rather than the FIFO basis during 2017 and 2018. The accounting department is to assume that the change to LIFO would have been effective on January 1, 2017, and that the initial LIFO base would have been the inventory value on December 31, 2016. The following are the company’s financial statements and other data for the years 2017 and 2018 when the FIFO method was employed. Financial Position as of 12/31/16 12/31/17 12/31/18 Cash $ 91,300 $132,000 $152,600 Accounts receivable 81,100 101,700 123,000 Inventory 123,000 139,300 178,000 Other assets 158,300 173,400 201,900 Total assets $453,700 $546,400 $655,500 Accounts payable $ 39,900 $ 61,000 $ 81,100 Other liabilities 69,800 81,600 113,500 Common stock…

(Accounting Change) Gordon Company started operations on January 1, 2012, and has used the FIFO method of inventory valuation since its inception. In 2018, it decides to switch to the average-cost method. You are provided with the following information. Check the below image for information. Instructions(a) What is the beginning retained earnings balance at January 1, 2014, if Gordon prepares comparative financial statements starting in 2014?(b) What is the beginning retained earnings balance at January 1, 2017, if Gordon prepares comparative financial statements starting in 2017?(c) What is the beginning retained earnings balance at January 1, 2018, if Gordon prepares single-period financial statements for 2018?(d) What is the net income reported by Gordon in the 2017 income statement if it prepares comparative financial statements starting with 2015?

During 2014, Vanguard, Ic., changed to the LIFO method of accounting for inventory. Suppose that during 2013, Vanguard changed back to the FIFO method and the following year Vanguard switches back to LIFO again. Requirements 1. What would you think of a company's ethics if it changed accounting methods every year? 2. What accounting principle would changing methods every year violate? 3. Who can be harmed when a company changes its accounting methods too often? How?