Problem 8-7 Your answer is partially correct. Try again The management of Carla Company has asked its accounting department to describe the effect upon the company's financial position and its income statements of accounting for inventories on the LIFO rather than the FIFO basis during 2017 and 2018. The accounting department is to assume that the change to LIFO would have been effective on January 1, 2017, and that the initial LIFO base would have been the inventory value on December 31, 2016. The following are the company's financial statements and other data for the years 2017 and 2018 when the FIFO method was employed Financial Position as of Cash Accounts receivable Inventory Other assets 12/31/16 12/31/17 12/31/18 $156,800 173,200 176,500 203,300 $89,500 $129,700 101,800 139,200 169,500 $499,300 $540,200 $709,800 59,500 74,100 203,300 203,300 $499,300 $540,200 $709,800 79,800 173,200 156,800 Total assets Accounts payable Other liabilities Common stock Retained earnings $39,400 116,500 203,300 140,100 $ 79,800 163,100 203,300 263,600 Total liabilities and equity Income for Years Ended 12/31/17 12/31/18 $1,704,690 761,600 298,400 1,060,000 644,690 257,876 386,814 Sales revenue $1,073,100 505,100 202,000 707,100 366,000 146,400 $219,600 Cost of goods sold Other expenses Less: Income before income taxes Income taxes (40%) Net income Other data 1. Inventory on hand at December 31, 2016, consisted of 43,300 units valued at $4 each 2. Sales (all units sold at the same price in a given year): 2017-153,300 units @ $7 each 2018-183,300 units @ $9.30 each 3. Purchases (all units purchased at the same price in given year): 2017-153,300 units @ $4.30 each 2018-183,300 units @ $5.50 each 4. Income taxes at the effective rate of 40% are paid on December 31 each year Name the account(s) presented in the financial statements that would have different amounts for 2018 if LIFO rather than FIFO had been used, and state the new amount for each account that is named Name the account(s) presented in the financial statements that would have different amounts for 2018 if LIFO rather than FIFO had been used, and state the new amount for each account that is named. amount for 2018 New Account Retained Earnings Inventory Cash Income Taxes Cost of Goods Sold Click if you would like to Show Work for this question: pen Show Work Problem 8-7 Your answer is partially correct. Try again The management of Carla Company has asked its accounting department to describe the effect upon the company's financial position and its income statements of accounting for inventories on the LIFO rather than the FIFO basis during 2017 and 2018. The accounting department is to assume that the change to LIFO would have been effective on January 1, 2017, and that the initial LIFO base would have been the inventory value on December 31, 2016. The following are the company's financial statements and other data for the years 2017 and 2018 when the FIFO method was employed Financial Position as of Cash Accounts receivable Inventory Other assets 12/31/16 12/31/17 12/31/18 $156,800 173,200 176,500 203,300 $89,500 $129,700 101,800 139,200 169,500 $499,300 $540,200 $709,800 59,500 74,100 203,300 203,300 $499,300 $540,200 $709,800 79,800 173,200 156,800 Total assets Accounts payable Other liabilities Common stock Retained earnings $39,400 116,500 203,300 140,100 $ 79,800 163,100 203,300 263,600 Total liabilities and equity Income for Years Ended 12/31/17 12/31/18 $1,704,690 761,600 298,400 1,060,000 644,690 257,876 386,814 Sales revenue $1,073,100 505,100 202,000 707,100 366,000 146,400 $219,600 Cost of goods sold Other expenses Less: Income before income taxes Income taxes (40%) Net income Other data 1. Inventory on hand at December 31, 2016, consisted of 43,300 units valued at $4 each 2. Sales (all units sold at the same price in a given year): 2017-153,300 units @ $7 each 2018-183,300 units @ $9.30 each 3. Purchases (all units purchased at the same price in given year): 2017-153,300 units @ $4.30 each 2018-183,300 units @ $5.50 each 4. Income taxes at the effective rate of 40% are paid on December 31 each year Name the account(s) presented in the financial statements that would have different amounts for 2018 if LIFO rather than FIFO had been used, and state the new amount for each account that is named Name the account(s) presented in the financial statements that would have different amounts for 2018 if LIFO rather than FIFO had been used, and state the new amount for each account that is named. amount for 2018 New Account Retained Earnings Inventory Cash Income Taxes Cost of Goods Sold Click if you would like to Show Work for this question: pen Show Work
