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As of January 1, 20X8, Willard Company decided to change from the LIFO method of inventory valuation to the FIFO method. For this problem, ignore
As of January 1, 20X8, Willard Company decided to change from the LIFO method of inventory valuation to the FIFO method. For this problem, ignore income taxes. Data for the past four years (including 20X8) are as follows: 20X8 20X7 20X6 20X5 Cost of goods soldLIFO 1,200 900 720 600 Ending inventoryLIFO 200 150 120 100 Ending retained earningsLIFO 1,668 1,188 828 540 Cost of goods soldFIFO 1,170 880 710 595 Ending inventoryFIFO 300 220 170 140 In this problem, Willard Company has no expenses except for cost of goods sold. In its 20X8 financial statements, Willard will restate its 20X7 and 20X6 financial statements and report the Cost of Goods SoldFIFO and Ending InventoryFIFO numbers. Willard will also need to report an adjusted Retained Earnings balance as of the beginning of 20X6. The originally reported Retained Earnings balance on that date, using LIFO, was $540 (the 20X5 ending balance). What is the retrospectively recalculated Retained Earnings balance as of January 1, 20X6, after the change to FIFO is made? Note: Ignore income taxes. $680 $400 $640 $580
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