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.

image text in transcribed

image text in transcribed

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 $125,000 (average cost basis) and were $129.000 a year earlier. Cecil-Booker's accountants determined that the inventories would have totaled $165,000 at December 31, 2020, and $170.000 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 $450,000 in 2020 and $575,000 in 2021. There were no discontinued operations either year. DOK Required: 1. Prepare the journal entry at January 1, 2021, to record the change in accounting principle. (All tax effects should be reflected in the deferred tax liability account.) 2. Prepare the 2021-2020 comparative income statements beginning with income from continuing operations (adjusted for any revisions). Include per share amounts. Complete this question by entering your answers in the tabs below. enges Required 1 Required 2 Prepare the journal entry at January 1, 2021, to record the change in accounting principle. (All tax effects should be reflected in the deferred tax liability account.) (if no entry is required for a transaction/event, select "No journal entry required" in the first account field.) SHARE View transaction list View journal entry worksheet PA No Date General Jouma Debit Credit 1 January 01, 2021 nventory 40.000 18.000 Required 2 > 1 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 $125,000 (average cost basis) and were $129,000 a year earlier. Cecil-Booker's accountants determined that the inventories would have totaled $165.000 at December 31, 2020, and $170,000 at December 31, 2019, if determined on a FIFO basis. A tax rate of 25% is in effect for all years. 16.66 points One hundred thousand common shares were outstanding each year. Income from continuing operations was $450,000 in 2020 and $575.000 in 2021. There were no discontinued operations either year. eBook Required: 1. Prepare the journal entry at January 1, 2021. to record the change in accounting principle. (All tax effects should be reflected in the deferred tax liability account.) 2. Prepare the 2021-2020 comparative income statements beginning with income from continuing operations (adjusted for any revisions). Include per share amounts. Print Complete this question by entering your answers in the tabs below. References Required 1 Required 2 Prepare the 2021-2020 comparative income statements beginning with income from continuing operations (adjusted for any revisions). Include per share amounts. (Round EPS answers to 2 decimal places.) COMPARATIVE INCOME STATEMENTS 2021 2020 0 $ 0 Earnings per common share

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_2

Step: 3

blur-text-image_3

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

Data Analytics For Accounting

Authors: Vernon Richardson

3rd Edition

1264444907, 9781264444908

More Books

Students also viewed these Accounting questions

Question

2. Find five metaphors for communication.

Answered: 1 week ago