Question
In: Accounting
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018...
Fantasy Fashions had used the LIFO method of costing
inventories, but at the beginning of 2018 decided to change to the
FIFO method. The inventory as reported at the end of 2017 using
LIFO would have been $21 million higher using FIFO.
Retained earnings reported at the end of 2016 and 2017 was $241
million and $261 million, respectively (reflecting the LIFO
method). Those amounts reflecting the FIFO method would have been
$251 million and $273 million, respectively. 2017 net income
reported at the end of 2017 was $29 million (LIFO method) but would
have been $31 million using FIFO. After changing to FIFO, 2018 net
income was $37 million. Dividends of $9 million were paid each
year. The tax rate is 40%.
Required:
1. Prepare the journal entry at the beginning of
2018 to record the change in accounting principle.
2. In the 2018–2017 comparative income statements,
what will be the amounts of net income reported for 2017 and
2018?
3. Prepare the 2018–2017 retained earnings column
of the comparative statements of shareholders’ equity.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018...
Fantasy Fashions had used the LIFO method of costing
inventories, but at the beginning of 2018 decided to change to the
FIFO method. The inventory as reported at the end of 2017 using
LIFO would have been $22 million higher using FIFO. Retained
earnings reported at the end of 2016 and 2017 was $242 million and
$262 million, respectively (reflecting the LIFO method). Those
amounts reflecting the FIFO method would have been $252 million and
$274 million, respectively. 2017 net...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018...
Fantasy Fashions had used the LIFO method of costing
inventories, but at the beginning of 2018 decided to change to the
FIFO method. The inventory as reported at the end of 2017 using
LIFO would have been $10 million higher using FIFO.
Retained earnings reported at the end of 2016 and 2017 was $230
million and $250 million, respectively (reflecting the LIFO
method). Those amounts reflecting the FIFO method would have been
$240 million and $262 million, respectively. 2017 net...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018...
Fantasy Fashions had used the LIFO method of costing
inventories, but at the beginning of 2018 decided to change to the
FIFO method. The inventory as reported at the end of 2017 using
LIFO would have been $10 million higher using FIFO.
Retained earnings reported at the end of 2016 and 2017 was $230
million and $250 million, respectively (reflecting the LIFO
method). Those amounts reflecting the FIFO method would have been
$240 million and $262 million, respectively. 2017 net...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018...
Fantasy Fashions had used the LIFO method of costing
inventories, but at the beginning of 2018 decided to change to the
FIFO method. The inventory as reported at the end of 2017 using
LIFO would have been $26 million higher using FIFO. Retained
earnings reported at the end of 2016 and 2017 was $246 million and
$266 million, respectively (reflecting the LIFO method). Those
amounts reflecting the FIFO method would have been $256 million and
$278 million, respectively. 2017 net...
Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018...
Fantasy Fashions had used the LIFO method of costing
inventories, but at the beginning of 2018 decided to change to the
FIFO method. The inventory as reported at the end of 2017 using
LIFO would have been $15 million higher using FIFO.
Retained earnings reported at the end of 2016 and 2017 was $235
million and $255 million, respectively (reflecting the LIFO
method). Those amounts reflecting the FIFO method would have been
$245 million and $267 million, respectively. 2017 net...
F8i-G2 Company uses the LIFO inventory costing method. The company had a beginning inventory of 1,840...
F8i-G2 Company uses the LIFO inventory costing method. The
company had a beginning inventory of 1,840 units that cost
$13.40 each. Purchases were made throughout the most recent
year as follows:
March: 2,100 units purchased at $15.80 per unit
June: 900 units purchased at $12.30 per unit
August: 1,400 units purchased at $16.65 per unit
October: 800 units purchased at $14.70 per unit
During the most recent year, 4,800 units were sold to customers
at a selling price of $21.00...
F8i-G2 Company uses the LIFO inventory costing method. The company had a beginning inventory of 1,840...
F8i-G2 Company uses the LIFO inventory costing method. The
company had a beginning inventory of 1,840 units that cost
$13.20 each. Purchases were made throughout the most recent
year as follows:
March: 2,100 units purchased at $15.60 per unit
June: 900 units purchased at $12.10 per unit
August: 1,400 units purchased at $16.35 per unit
October: 800 units purchased at $14.40 per unit
During the most recent year, 4,800 units were sold to customers
at a selling price of $21.00...
Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO...
Aquatic Equipment Corporation decided to switch from the LIFO
method of costing inventories to the FIFO method at the beginning
of 2018. The inventory as reported at the end of 2017 using LIFO
would have been $56,000 higher using FIFO. Retained earnings at the
end of 2017 was reported as $740,000 (reflecting the LIFO method).
The tax rate is 35%.
Required:
1. Calculate the balance in retained earnings at
the time of the change (beginning of 2018) as it would...
Bartal Co. used the LIFO inventory method. At the beginning of 2019, the company decided to...
Bartal Co. used the LIFO inventory method. At the beginning of
2019, the company decided to change to the FIFO method. For each
year reported in the comparability statements, the company makes
those statements appear as if FIFO had been applied all along. The
following table analyzes the impact of this change on the company’s
inventory and income.
Years ending Dec 31
($ in millions)
2019
2018
2017
Previous years
COGS (LIFO)
$430
$420
$405
$2,000
COGS (FIFO)
370
365...
At the beginning of 2018, Quentin and Kopps (Q&K) adopted the dollar-value LIFO (DVL) inventory method....
At the beginning of 2018, Quentin and Kopps (Q&K) adopted
the dollar-value LIFO (DVL) inventory method. On that date the
value of its one inventory pool was $81,000. The company uses an
internally generated cost index to convert ending inventory to base
year.
Required:
Determine the missing amounts in the inventory data for 2018
through 2021.
Year Ended
Ending Inventory At
Ending Inventory At
Ending Inventory At
31-Dec
Year-End Costs
Base Year Costs
Cost Index
DVL Cost
2018
$
95,550.00...
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