Accounting Changes and Restatements PROBLEM A Juliana Corporation was incorporated on January 2, 2016 with an initial capitalization of $250,000 (50,000 shares of common stock). The company has been using the LIFO method of inventory valuation since inception. At the beginning of 2018, company management decided to switch to the FIFO method because it is used by all other companies in the industry. The accounting entry to make this accounting change to FIFO was made on January 1,2018. Julie Sharp, Controller, prepared the preliminary 2018 financial statements using FIFO for the 2018 financial statements. The following financial information includes the published financial information for the years ending December 31, 2017 and 2016 and the preliminary financial information compiled by Julie for the year ended December 31, 2018. Balance Sheet (FIFO) 2018 0 (LIFO) 2017 (LIFO) 2016 Assets Cash Accounts Receivable Inventory Fixed Assets -Net Total Assets 85,000 55,000 335,000 101.818 70,000 50,000 275,000 130,909 50,000 35,000 260,000 163.636 9 4 Accounting Changes and Restatements PROBLEM A Juliana Corporation was incorporated on January 2, 2016 with an initial capitalization of $250,000 (50,000 shares of common stock). The company has been using the LIFO method of inventory valuation since inception. At the beginning of 2018, company management decided to switch to the FIFO method because it is used by all other companies in the industry. The accounting entry to make this accounting change to FIFO was made on January 1,2018. Julie Sharp, Controller, prepared the preliminary 2018 financial statements using FIFO for the 2018 financial statements. The following financial information includes the published financial information for the years ending December 31, 2017 and 2016 and the preliminary financial information compiled by Julie for the year ended December 31, 2018. Balance Sheet (FIFO) 2018 0 (LIFO) 2017 (LIFO) 2016 Assets Cash Accounts Receivable Inventory Fixed Assets -Net Total Assets 85,000 55,000 335,000 101.818 70,000 50,000 275,000 130,909 50,000 35,000 260,000 163.636 9 4