Chapter 21, Problem 21.2P

a.

To determine

FIFO:

It stands for first in first out. It is an inventory valuation method in which the firm accepts that the first goods bought are also the first good sold. This method calculates the value of closing inventory at the end of an accounting period.

Weighted Average Cost Method:

It is another inventory valuation method in which the cost of each inventory is determined based on the average cost per unit of inventory.

The net income.

b.

To determine

FIFO:

It stands for first in first out. It is an inventory valuation method in which the firm accepts that the first goods bought are also the first good sold. This method calculates the value of closing inventory at the end of an accounting period.

Weighted Average Cost Method:

It is another inventory valuation method in which the cost of each inventory is determined based on the average cost per unit of inventory.

The cumulative effect on retained earnings from the change in accounting method from weighted average to FIFO.

c.

To determine

FIFO:

It stands for first in first out. It is an inventory valuation method in which the firm accepts that the first goods bought are also the first good sold. This method calculates the value of closing inventory at the end of an accounting period.

Weighted Average Cost Method:

It is another inventory valuation method in which the cost of each inventory is determined based on the average cost per unit of inventory.

To prepare: Comparative income statement under the FIFO method.