Question
Exercise 4-14 Tim Mattke Company began operations in 2018 and for simplicity reasons, adopted weighted-average pricing for inventory. In 2020, in accordance with other companies
Exercise 4-14 Tim Mattke Company began operations in 2018 and for simplicity reasons, adopted weighted-average pricing for inventory. In 2020, in accordance with other companies in its industry, Tim Mattke changed its inventory pricing to FIFO. The pretax income data is reported below.
Year | Weighted-Average | FIFO |
2018 | $370,000 | $395,000 |
2019 | 390,000 | 430,000 |
2020 | 410,000 | 450,000 |
Q1
What is Tim Mattkes net income in 2020? Assume a 20% tax rate in all years.
Net Income |
Q2
Compute the cumulative effect of the change in accounting principle from weighted-average to FIFO inventory pricing.
Net effect |
|
Q3
Show comparative income statements for Tim Mattke Company, beginning with income before income tax, as presented on the 2020 income statement.
2020 | 2019 | 2018 | |
Income before income tax | |||
Income tax | |||
Net income |
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