Question
The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost method to the FIFO cost method at the beginning of 2016.
The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost method to the FIFO cost method at the beginning of 2016. At December 31, 2015, inventories were $129,000 (average cost basis) and were $133,000 a year earlier. Cecil-Bookers accountants determined that the inventories would have totaled $173,000 at December 31, 2015, and $178,000 at December 31, 2014, if determined on a FIFO basis. A tax rate of 40% is in effect for all years. |
One hundred thousand common shares were outstanding each year. Income from continuing operations was $490,000 in 2015 and $615,000 in 2016. There were no discontinued operations either year. |
Required: |
1. | Prepare the journal entry to record the change in accounting principle. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) |
2. | Prepare the 20162015 comparative income statements beginning with income from continuing operations. Include per share amounts. (Round EPS answers to 2 decimal places.) |
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