Exercise 22-2

Pina Company began operations on January 1, 2015, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2018. The following information is available for the years 20152017.

		Net Income Computed Using
		Average-Cost Method		FIFO Method		LIFO Method
2015		$15,900		$19,100		$11,930
2016		17,980		21,080		14,010
2017		20,170		25,210		17,150

(a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

(b) Determine net income to be reported for 2015, 2016, and 2017, after giving effect to the change in accounting principle.

		Net Income
2015		$
2016		$
2017		$

(c) Assume Pina Company used the LIFO method instead of the average cost method during the years 20152017. In 2018, Pina changed to the FIFO method. Prepare the journal entry necessary to record the change in principle. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit