Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 2021.

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 2021. At December 31, 2020, inventories were $127,000 (average cost basis) and were $131,000 a year earlier. Cecil-Booker's accountants determined that the inventories would have totaled $169,000 at December 31, 2020, and $174,000 at December 31, 2019, if determined on a FIFO basis. A tax rate of 25% is in effect for all years.

One hundred thousand common shares were outstanding each year. Income from continuing operations was $470,000 in 2020 and $595,000 in 2021. There were no discontinued operations either year.

I need to figure out how to prepare the journal entry at January 1, 2021, to record the change in accounting principle and prepare the 2021-2020 comparative income statements beginning with income from continuing operations (adjusted for any revisions).

Could I get help with this?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Computer Accounting

Authors: Donna Kay

15th Edition

0077826841, 9780077826840

More Books

Students also viewed these Accounting questions

Question

When does partial hedge ineffectiveness occur?

Answered: 1 week ago

Question

What is goodwill? How does it arise?

Answered: 1 week ago

Question

Describe how to distinguish needs from wants.

Answered: 1 week ago

Question

Peoples understanding of what is being said

Answered: 1 week ago

Question

The quality of the proposed ideas

Answered: 1 week ago