Question
Skysong Company began operations in 2015 and for simplicity reasons, adopted weighted-average pricing for inventory. In 2017, in accordance with other companies in its industry,
Skysong Company began operations in 2015 and for simplicity reasons, adopted weighted-average pricing for inventory. In 2017, in accordance with other companies in its industry, Skysong changed its inventory pricing to FIFO. The pretax income data is reported below.
Year
Weighted-Average
FIFO
2015$377,500$415,2002016401,100426,8002017417,200475,800
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What is Skysong's net income in 2017? Assume a35% tax rate in all years.
Net Income$
Compute the cumulative effect of the change in accounting principle from weighted-average to FIFO inventory pricing.
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