Question
In: Accounting
Goddard Company has used the FIFO method of inventory valuation since it began operations in 2015....
Goddard Company has used the FIFO method of inventory valuation
since it began operations in 2015. Goddard decided to change to the
average cost method for determining inventory costs at the
beginning of 2018. The following schedule shows year-end inventory
balances under the FIFO and average cost methods:
| Year | FIFO | Average Cost | ||||
| 2015 | $ | 46,300 | $ | 56,600 | ||
| 2016 | 81,900 | 72,300 | ||||
| 2017 | 88,200 | 81,900 | ||||
Required:
1. Ignoring income taxes, prepare the 2018 journal
entry to adjust the accounts to reflect the average cost
method.
2. How much higher or lower would cost of goods
sold be in the 2017 revised income statement?
- Required 1
Ignoring income taxes, prepare the 2018 journal entry to adjust the accounts to reflect the average cost method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Journal entry worksheet
- Record the adjustment necessary to reflect the average cost method.
Note: Enter debits before credits.
|
- Required 2
How much higher or lower would cost of goods sold be in the 2017 revised income statement?
|
Solutions
ekkarill92 answered 8 months agoRelated Solutions
Goddard Company has used the FIFO method of inventory valuation since it began operations in 2015....
Goddard Company has used the FIFO method of inventory valuation
since it began operations in 2015. Goddard decided to change to the
average cost method for determining inventory costs at the
beginning of 2018. The following schedule shows year-end inventory
balances under the FIFO and average cost methods:
Year
FIFO
Average Cost
2015
$
47,000
$
58,000
2016
84,000
73,000
2017
91,000
84,000
Required:
1. Ignoring income taxes, prepare the 2018 journal
entry to adjust the accounts to reflect the...
Fava Company began operations in 2015 and used the LIFO inventory method for both financial reporting...
Fava Company began operations in 2015 and used the LIFO
inventory method for both financial reporting and income taxes. At
the beginning of 2016, the anticipated cost trends in the industry
had changed, so that it adopted the FIFO method for both financial
reporting and income taxes. Fava reported revenues of $300,000 and
$270,000 in 2016 and 2015, respectively. Fava reported expenses
(excluding income tax expense) of $125,000 and $120,000 in 2016 and
2015, which included cost of goods sold...
The Jamieson Corporation used a periodic inventory system and has used the FIFO method since the...
The Jamieson Corporation used a periodic inventory system and
has used the FIFO method since the company’s inception. In 20x5,
the company decided to switch to the average cost method. Data for
20x5 is as follows:
Beginning inventory, FIFO (5,000 units @ $30.00) $150,000
Purchases 5,000 units @ $36.00 = $180,000
5,000 units @ 40.00 = 200,000
Total 380,000
Cost of goods available for sale $530,000
Sales for 20x5 (8,000 units @ $70.00) $560,000
Additional information – 1. The company’s...
Oriole Company started operations on January 1, 2012, and has used the FIFO method of inventory...
Oriole Company started operations on January 1, 2012, and has
used the FIFO method of inventory valuation since its inception. In
2018, it decides to switch to the average-cost method. You are
provided with the following information.
Net Income
Retained Earnings
(Ending Balance)
Under FIFO
Under Average-Cost
Under FIFO
2012
$92,000
$82,800
$90,600
2013
68,300
62,900
158,500
2014
81,300
70,800
255,000
2015
116,500
126,800
308,600
2016
301,400
290,400
644,800
2017
311,300
316,800
731,300
(a) What is the beginning retained earnings...
A company that uses a FIFO inventory system and began operations in Year 1 has the...
A company that uses a FIFO inventory system and began operations
in Year 1 has the following information. Year 1 Year 2 Sales units
8,000 10,000 Selling price $45 $46 Production units 12,000 8,000
Unit direct material cost $2.00 $2.00 Unit direct labor cost $1.00
$1.00 Unit commission cost $.50 $.50 Annual Fixed Overhead $180,000
$180,000 Annual Fixed S,G,&A $140,000 $150,000 1. What are the
inventoriable cost per unit in years 1 and 2? Absorption Costing
Variable Costing 2. What...
The Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since...
The Rockwell Corporation uses a periodic inventory system and
has used the FIFO cost method since inception of the company in
1979. In 2018, the company decided to change to the average cost
method. Data for 2018 are as follows:
Beginning inventory, FIFO (5,500 units @ $35.00) $ 192,500
Purchases:
5,500 units @ $41.00 $ 225,500
5,500 units @ $45.00 247,500 473,000
Cost of goods available for sale $ 665,500
Sales for 2018 (9,000 units @ $75.00) $ 675,000
Additional...
The Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since...
The Rockwell Corporation uses a periodic inventory system and
has used the FIFO cost method since inception of the company in
1982. In 2021, the company decided to change to the average cost
method. Data for 2021 are as follows:
Beginning inventory, FIFO (5,400 units @ $34.00)
$
183,600
Purchases:
5,400 units @ $40.00
$
216,000
5,400 units @ $44.00
237,600
453,600
Cost of goods available for sale
$
637,200
Sales for 2021 (8,800 units @ $74.00)
$
651,200
Additional...
The Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since...
The Rockwell
Corporation uses a periodic inventory system and has used the FIFO
cost method since inception of the company in 1979. In 2018, the
company decided to change to the average cost method. Data for 2018
are as follows:
Beginning
inventory, FIFO (5,000 units @ $30.00)
$
150,000
Purchases:
5,000 units @
$36.00
$
180,000
5,000 units @
$40.00
200,000
380,000
Cost of goods
available for sale
$
530,000
Sales for 2018
(8,000 units @ $70.00)
$
560,000
Additional...
Calculating FIFO Inventory Values The Mann Corporation began operations in 2015. Information relating to the company’s...
Calculating FIFO Inventory Values
The Mann Corporation began operations in 2015. Information
relating to the company’s purchases of inventory and sales of
products for 2015 and 2016 is presented below.
2015
January 1
Purchase
200
units
@
$10
per unit
April 1
Sold
120
units
@
$25
per unit
July 1
Purchase
100
units
@
$14
per unit
September 1
Sold
130
units
@
$25
per unit
2016
January 1
Purchase
100
units
@
$16
per unit
April 1
Sold...
Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception...
Rockwell Corporation uses a periodic inventory system and has
used the FIFO cost method since inception of the company in 1979.
In 2018, the company decided to switch to the average cost method.
Data for 2018 are as follows: Beginning inventory, FIFO (5,500
units @ $26) $ 143,000 Purchases: 5,500 units @ $32 $ 176,000 4,000
units @ $36 144,000 320,000 Cost of goods available for sale $
463,000 Sales for 2018 (9,000 units @ $72) $ 648,000 Additional
Information:...
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