Question

Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO...

Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the beginning of 2016. The inventory as reported at the end of 2015 using LIFO would have been $56,000 higher using FIFO. Retained earnings at the end of 2015 was reported as $740,000 (reflecting the LIFO method). The tax rate is 35%.

  

Required:
1.

Calculate the balance in retained earnings at the time of the change (beginning of 2016) as it would have been reported if FIFO had been used in prior years.

    

2.

Prepare the journal entry at the beginning of 2016 to record the change in accounting principle. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

    

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO...
Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the beginning of 2018. The inventory as reported at the end of 2017 using LIFO would have been $53,000 higher using FIFO. Retained earnings at the end of 2017 was reported as $710,000 (reflecting the LIFO method). The tax rate is 35%. Required: 1. Calculate the balance in retained earnings at the time of the change (beginning of 2018) as it would...
1.) Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the...
1.) Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the beginning of 2018. The inventory as reported at the end of 2017 using LIFO would have been $54,000 higher using FIFO. Retained earnings at the end of 2017 was reported as $720,000 (reflecting the LIFO method). The tax rate is 34%. Required: 1. Calculate the balance in retained earnings at the time of the change (beginning of 2018) as it...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018 decided to change to the FIFO method. The inventory as reported at the end of 2017 using LIFO would have been $15 million higher using FIFO. Retained earnings reported at the end of 2016 and 2017 was $235 million and $255 million, respectively (reflecting the LIFO method). Those amounts reflecting the FIFO method would have been $245 million and $267 million, respectively. 2017 net...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018 decided to change to the FIFO method. The inventory as reported at the end of 2017 using LIFO would have been $15 million higher using FIFO. Retained earnings reported at the end of 2016 and 2017 was $235 million and $255 million, respectively (reflecting the LIFO method). Those amounts reflecting the FIFO method would have been $245 million and $267 million, respectively. 2017 net...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2021...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2021 decided to change to the FIFO method. The inventory as reported at the end of 2020 using LIFO would have been $25 million higher using FIFO. Retained earnings reported at the end of 2019 and 2020 was $245 million and $265 million, respectively (reflecting the LIFO method). Those amounts reflecting the FIFO method would have been $255 million and $277 million, respectively. 2020 net...
Gerald Co. decided to switch from the FIFO method of costing inventories to the average cost...
Gerald Co. decided to switch from the FIFO method of costing inventories to the average cost method at the beginning of 2016. At December 31, 2015, Gerald’s inventory using FIFO was $36,000. Gerald inventory using average cost would have been $52,640. Gerald’s tax rate is 30%. What is the change to Inventory? Indicate the amount and whether Inventory would be debited (D) or Credited (C). Answer with the amount and either a D or C right beside the amount (no...
At the beginning of 2016, Air Parts Corp. changed from LIFO to FIFO for inventory costing....
At the beginning of 2016, Air Parts Corp. changed from LIFO to FIFO for inventory costing. Cost of goods sold under LIFO for the last two years was (in millions): 2014: $405 2015: $420 Cost of good sold under FIFO would have been: 2014: $360 2015: $365 Prior to 2014, the cost of goods sold would have been lower by $300 under FIFO. Air Parts pays income taxes at a rate of 40%. Retained earnings on January 1, 2014, was...
During 2014 (its first year of operations) and 2015, Batali Foods used the FIFO inventory costing...
During 2014 (its first year of operations) and 2015, Batali Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2016, Batali decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2016, 2015, and 2014 were as follows ($ in millions): 2016 2015 2014 Revenues $ 430 $ 400 $ 390 Cost of goods sold (FIFO) (47 ) (41 ) (39...
Below is the net income of Jonesey Laboratorires computed under the three invertory methods. Instructions: a....
Below is the net income of Jonesey Laboratorires computed under the three invertory methods. Instructions: a. Assume that in 2008 Jonesey decided to change from the average-cost method to the FIFO method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2018 and show the net income reported for 2016, 2017, and 2018. b. Assume that in 2018 JOnesey, which had been using the LIFO method since incorporation in 2015, changed to the average...
ABC Corp. used the FIFO method for 2017 (its first year of operations), then switch to...
ABC Corp. used the FIFO method for 2017 (its first year of operations), then switch to the average method in 2018. Beginning and ending inventory was $200,000 and $250,000, respectively, for FIFO; and $260,000 and $310,000, respectively for average method in 2017. Assume a tax rate of 35% for both years. Outstanding shares were 150,000 each year. Income from continuing operations was $600,000 in 2017 and $700,000 in 2018. There were no discontinued operations either year. Make the journal entry...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT