Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

During 2019 (its first year of operations) and 2020, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes.

image text in transcribed

During 2019 (its first year of operations) and 2020, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Fieri decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2019, 2020, and 2021 were as follows: ($ in millions) Revenues Cost of goods sold (FIFO) Cost of goods sold (average) Operating expenses 2019 2020 2021 $ 420 $430 $ 460 (42) (44) (50) (60) (64) (70) (258) (266) (270) Dividends of $23 million were paid each year. Fieri's fiscal year ends December 31. Required: 1. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) 2. Prepare the 2021-2020 comparative income statements. 3. & 4. Determine the balance in retained earnings at January 1, 2020 as Fieri reported using FIFO method and determine the adjustment of balance in retained earnings as on January 1, 2020 using average method instead of FIFO method. > Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 and 4 Determine the balance in retained earnings at January 1, 2020 as Fieri reported using FIFO method and determine the adjustment of balance in retained earnings as on January 1, 2020 using average method instead of FIFO method. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) ($ in millions) Retained earnings balance previously reported using FIFO, Jan. 1, 2020 $ 103 X Adjustment to balance for change in inventory methods (18) Retained earnings balance using average method, Jan. 1, 2020 $ 85 X

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting with IFRS Fold Out Primer

Authors: John Wild

5th edition

978-0077408770, 77408772, 978-0077413804

Students also viewed these Accounting questions

Question

6. Have all related SCIs been properly updated?

Answered: 1 week ago