Question
Shown below are net income amount as they would be determined by Roberti Steel Company by each of three different inventory costing methods ($ in
Shown below are net income amount as they would be determined by Roberti Steel Company by each of three different inventory costing methods ($ in thousands).
FIFO | Average Cost | LIFO | |
Pre-2023 | $2,820 | $2,560 | $2,300 |
2023 | 760 | 590 | 545 |
$3,580 | $3,150 | $2,845 |
Required:
1. Assume that Roberti Steel Company used FIFO before 2024, and then in 2024 decided to switch to average cost. Prepare the journal entry to record the change in accounting principle. (Ignore income tax effects.)
2. Assume that Roberti Steel Company used FIFO before 2024, and then in 2024 decided to switch to LIFO. Assume accounting records are inadequate to determine LIFO information prior to 2024. Therefore, the 2023 ($545) and pre-2023 ($2,300) data are not available. Prepare the journal entry to record the change in accounting principle. (Ignore income tax effects.)
3. Assume that Roberti Steel Company used FIFO before 2024, and then in 2024 decided to switch to LIFO cost. Roberti Steel Company's records of inventory purchases and sales are not available for several previous years. therefore, the pre-2023 LIFO information ($2,300) is not available. However, Roberti Steel Company does have the information needed to apply LIFO on a prospective basis beginning in 2023. Prepare the journal entry to record the change in accounting principle. (Ignore income tax effects.)
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