The management of Coronado Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Coronado changed its method of pricing inventory from last-in, first-out (LIFO) to average-cost in 2020. Given below is the 5-year summary of income under LIFO and a schedule of what the inventories would be if stated on the average-cost method.
S Kieso, Intermediate Accounting, 17e Help | System Announcements CALCULATOR PRINTER VERSION BACK NEXT Problem 22-01 The management of Coronado Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Coronado changed its method of pricing inventory from last-in, first-out (LIFO) to average-cost in 2020. Given below is the 5-year summary of income under LIFO and a schedule of what the inventories would be if stated on the average- cost method. CORONADO INSTRUMENT COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED MAY 31 2016 2017 2018 2019 2020 Sales-net $13,840 $15,520 $16,720 $18,340 $19,020 Cost of goods sold Beginning inventory 1,010 1,110 066 1,130 1,220 Purchases 13,120 13,980 14,890 15,930 18,047 Ending inventory (1,110) (990) (1,130) (1,220) (1,360) Total 13,020 14,100 14,750 15,840 17,907 Gross profit 820 1,420 1,970 2,500 1,113 Administrative expenses 700 770 830 910 990 Income before taxes 120 650 1,140 1,590 123 Income taxes (50%) 60 325 570 795 62 Net income 60 325 570 795 61 Retained earnings-beginning 1,210 1,270 1,595 2,165 2,960 Retained earnings-ending $1,270 $1,595 $2,165 $2,960 $3,021 Earnings per share $0.60 $3.25 $5.70 $7.95 $0.61 SCHEDULE OF INVENTORY BALANCES USING AVERAGE-COST METHOD FOR THE YEARS ENDED MAY 31 2015 2016 2017 2018 2019 2020 $1,020 $1,140 $1,090 $1,290 $1,480 $1,700 Prepare comparative statements for the 5 years, assuming that Coronado changed its method of inventory pricing to average-cost. Indicate the effects on net income and earnings per share for the years involved. Coronado Instruments started business in 2015. Assume that the number of shares outsanding is 100. (Enter amounts that decrease cost of goods sold using either a negative sign preceding the number e.g. -15,000 or parentheses e.g. (15,000). Round all amounts except EPS to the nearest whole dollar, e.g. 5,275. Round Earnings Per Share to 2 decimal places, e.g. 1.62. Round up the tax effects to the next whole dollar.)WileyPLUS Kieso, Intermediate Accounting, 17e Help | System Announcements CALCULATOR PRINTER VERSION BACK NEXT ASSIGNMENT RESOURCES Prepare comparative statements for the 5 years, assuming that Coronado changed its method of inventory pricing to average-cost. Indicate the effects on net income and earnings per share for the years involved. Coronado Instruments started business in 2015. Assume that the number of shares outsanding is 100. ( Enter amounts that decrease cost of goods sold using either a negative sign Module 7 HW OL preceding the number e.g. -15,000 or parentheses e.g. (15,000). Round all amounts except EPS to the nearest whole dollar, e.g. 5,275. Round Earnings Per Share to 2 decimal places, e.g. Problem 21-01 1.62. Round up the tax effects to the next whole dollar.) Problem 22-01 CORONADO INSTRUMENT COMPANY Review Score Statement of Income and Retained Earnings For the Years Ended May 31 Review Results by Study 2016 2017 2018 2019 2020 Objective Sales-net 13840 $1 15520 16720 18340 HA- 19020 Cost of goods sold Beginning inventory Purchases Ending inventory Total Gross profit Administrative expenses Income before taxes Income taxes Net income Retained earnings-beginning: As originally reported Adjustment As restated Retained earnings-ending Earnings per share
