Question
Lego Company has used the FIFO method since it began operations in 2023. Lego changed to the weighted average method in 2026. The change was
Lego Company has used the FIFO method since it began operations in 2023. Lego changed to the weighted average method in 2026. The change was justified. In its 2026 financial statements, Lego included comparative statements for 2025 and 2024. The following are the year-end inventory balances under the FIFO and weighted average methods.
| Year | FIFO | Weighted Average |
| 2023 | $ 90,000 | $108,000 |
| 2024 | $142,000 | $156,000 |
| 2025 | $166,000 | $150,000 |
By what amount should cost of sales be retrospectively adjusted for the year ended December 31, 2025?
a.
$30,000 decrease
b.
$2,000 increase
c.
$30,000 increase
d.
$16,000 increase
e.
$16,000 decrease
Leftarm Inc. is a calendar-year corporation. The following errors were made:
- Leftarm purchased Treasury Stock at 12/31/23 for $5,000. No journal entry was recorded in either 2023 or 2024.
- Purchased a two-year insurance policy covering 2023 and 2024 and expensed it immediately: $4,000
12/31/24 Total Stockholders Equity is in error by:
a.
$4,000
b.
$5,000
c.
$9,000
d.
$1,000
e.
$0
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Survey of Accounting
Authors: Edmonds, old, Mcnair, Tsay
2nd edition
9780077392659, 978-0-07-73417, 77392655, 0-07-734177-5, 73379557, 978-0073379555
