Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

During 2022 (its first year of operations) and 2023, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At

During 2022 (its first year of operations) and 2023, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2024, Fieri decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2022, 2023, and 2024 were as follows: ($ in millions) 2022 2023 2024 Revenues $ 570 $ 580 $ 610 Cost of goods sold (FIFO) (57) (59) (65) Cost of goods sold (average) (90) (94) (100) Operating expenses (318) (326) (330) Dividends of $38 million were paid each year. Fieris fiscal year ends December 31. Required: 1. Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. (Ignore income taxes.) 2. Prepare the 20242023 comparative income statements. 3. & 4. Determine the balance in retained earnings at January 1, 2023, as Fieri reported using FIFO method and determine the adjustment of balance in retained earnings as on January 1, 2023 using average method instead of FIFO method.

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

Sarbanes Oxley Internal Controls Effective Auditing With AS5 CobiT And ITIL

Authors: Robert R. Moeller

1st Edition

0470170921, 978-0470170922

More Books

Students also viewed these Accounting questions