Question
In: Accounting
Year Pretax income with weighted average pretax income with FIFO 2018 210,000 240,000 2019 250,000 290,000...
| Year | Pretax income with weighted average | pretax income with FIFO |
| 2018 | 210,000 | 240,000 |
| 2019 | 250,000 | 290,000 |
| 2020 | 175,000 | 190,000 |
30% tax. How much would be retained earning due to change in inventory methods?
-49,000
-85,000
-70,000
-59,500
Solutions
Expert Solution
| Year | Pretax income with weighted average | pretax income with FIFO | Change in Profit |
| 2018 | 210,000 | 240,000 | (30,000) |
| 2019 | 250,000 | 290,000 | (40,000) |
| 2020 | 175,000 | 190,000 | (15,000) |
| Total change in Pre-tax Income | (85,000) | ||
| Tax at 30% [$85,000 x 30%] | (25,500) | ||
| Therefore, the change in retained earning due to change in inventory methods [$85,000 - $25,500] | (59,500) | ||
ekkarill92 answered 2 years agoRelated Solutions
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