In 2020, Frost Company, which began operations in 2018, decided to change from LIFO to FIFO because management believed that FIFO better represened the flow of their inventory Management prepared the following analysis showing the effect of this change ending inventory LIFO FIFO cumulative difference 12 31 2018 $239,600 $271,600 $31,200 12 31 2019 $246,400 $301,800 $55,400 12 31 2020 $255,000 $328,700 $73,700 Frost reported net income of $2,487,000, $2,332,000, and $2,057,000 in 2018, 2019, and 2020, respectively The tax rate is 40 Required Prepare the journal entry necessary to record the change What amount of net income would Frost report in 2018, 2019, and 2020 CHART OF ACCOUNTS Frost Company General Ledger 532 Bad Debt Expense LIABILITIES 540 Interest Expense 211 Accounts Payable 541 Depreciation Expense 231 Salaries Payable 559 Miscellaneous Expenses 250 Unearned Revenue 910 Income Tax Expense 260 Deferred Tax Liability EQUITY 311 Common Stock 331 Retained Earnings 1 Prepare the journal entry to reflect the change on January 1, 2020 General Journal instructions 2 What amount of net income would Frost report in 2018, 2019, and 2020 after the change and restatement

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In 2020, Frost Company, which began operations in 2018, decided to change from LIFO to FIFO because management believed that FIFO better represened the flow

In 2020, Frost Company, which began operations in 2018, decided to change from LIFO to FIFO because management believed that FIFO better represened the flow of their inventory. Management prepared the following analysis showing the effect of this change:

ending inventory LIFO FIFO cumulative difference

______________________________________________________

12/31/2018. $239,600. $271,600 $31,200

12/31/2019. $246,400. $301,800 $55,400

12/31/2020. $255,000 $328,700. $73,700

Frost reported net income of $2,487,000, $2,332,000, and $2,057,000 in 2018, 2019, and 2020, respectively. The tax rate is 40%.

Required:

Prepare the journal entry necessary to record the change.
What amount of net income would Frost report in 2018, 2019, and 2020?

CHART OF ACCOUNTS Frost Company General Ledger 532 Bad Debt Expense LIABILITIES 540 Interest Expense 211 Accounts Payable 541 Depreciation Expense 231 Salaries Payable 559 Miscellaneous Expenses 250 Unearned Revenue 910 Income Tax Expense 260 Deferred Tax Liability EQUITY 311 Common Stock 331 Retained Earnings 1. Prepare the journal entry to reflect the change on January 1, 2020. General Journal instructions 2. What amount of net income would Frost report in 2018, 2019, and 2020 after the change and restatement