Armstrong Inc. purchased a patent for $40,000 on 1/1/19 and accidentally expensed the entire amount. The patent is supposed to be amortized over its legal life of 10 years. The company noticed the error during 2020. How would Armstrong Inc. correct this error on 12/31/20, ignoring tax?

Credit Retained Earnings by $36,000.

No adjustment necessary since it fixed itself.

Debit Amortization Expense by $8,000.

Debit Patent by $40,000

A company changed from the LIFO cost flow assumption to the FIFO cost flow assumption. The changes caused an decrease in the prior year's income before taxes by $450,000, assuming the tax rate is 21%. What would be included in the journal entries to adjust the prior period accounts (including tax and inventory)?

Inventory debited by 94,500

Inventory debited by 450,000

Cost of Goods Sold debited by 355,500

Retained earnings debited by 355,500