Question: Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the beginning of 2011. The inventory as

Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the beginning of 2011. The inventory as reported at the end of 2010 using LIFO would have been $60,000 higher using FIFO. Retained earnings at the end of 2010 was reported as $780,000 (reflecting the LIFO method). The tax rate is 40%.

Required:

1. Calculate the balance in retained earnings at the time of the change (beginning of 2011) as it would have been reported if FIFO had been used in prior years.

2. Prepare the journal entry at the beginning of 2011 to record the change in accounting principle.

Step by Step Solution

★★★★★

3.45 Rating (181 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Requirement 1 Balance at January 1 2011 using LIFO 780000 Prior to ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

254-B-A-E-A (291).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

Jones Corporation switched from the LIFO method of costing inventories to the FIFO method at the beginning of 2017. The LIFO inventory at the end of 2016 would have been $80,000 higher using FIFO....

Jones Corporation switched from the LIFO method of costing inventories to the FIFO method at the beginning of 20X1. The LIFO inventory at the end of 20X0 would have been $80,000 higher using FIFO....

Jones Corporation switched from the LIFO method of costing inventories to the FIFO method at the beginning of 2014. The LIFO inventory at the end of 2013 would have been $80,000 higher using 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...

Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the beginning of 2021. The inventory as reported at the end of 2020 using LIFO would...

Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the beginning of 2024. The inventory as reported at the end of 2023 using LIFO would...

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...

Exercise 20-2 (Algo) Change in principle; change in inventory methods (LO20-2] Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the...

According to an article in The Sacramento Bee (www.sacbee.com/2011/08/04/3816872/medicareprescription- premiums.html), approximately 10% of Medicare beneficiaries lack a prescription drug care plan....

Show that if o satisfies the heat equation then the change of dependent variable (Cole-Hopf transformation). u(x, t) = -2 (In o(r,t) satisfies the viscous Burgers equation Ut + uu,= Ur

Why does Australia normally record a current account deficit?

8. Security Risk The systematic risk of a security is also called its a. perceived risk b. unique or asset-specific risk c. market risk d. fundamental risk

List two types of transactions that would receive different accounting treatment using (a) Strict cash-basis accounting, and (b) A modified cash basis.

Question 10 5 pts Assume that you are given the following dividends for your company's common stock for Years 1-5. Also assume that after Year 5, dividends will then grow at a constant growth rate of...

Rf = 0.5% and market premium = 8%, long term historical Mkt return = 12% Apple and high-tech stock valuation ( 40 points) : Current price around $160 (Nov); the 52-week price range from 112 (March...

Jiminy's Cricket Farm issued a bond with 25 years to maturity and a semiannual coupon rate of 6 percent 2 years ago. The bond currently sells for 107 percent of its face value. addition, the company...