Question
In: Accounting
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 2021, the company decided to switch to the average cost method.
Data for 2021 are as follows:
| Beginning inventory, FIFO (4,300 units @ $35) | $ | 150,500 | ||||
| Purchases: | ||||||
| 4,300 units @ $41 | $ | 176,300 | ||||
| 4,300 units @ $45 | 193,500 | 369,800 | ||||
| Cost of goods available for sale | $ | 520,300 | ||||
| Sales for 2021 (5,000 units @ $68) | $ | 340,000 | ||||
Additional Information:
- The company's effective income tax rate is 25% for all years.
- If the company had used the average cost method prior to 2021, ending inventory for 2020 would have been $94,600.
- 7,900 units remained in inventory at the end of 2021.
Required:
1. Ignoring income taxes, prepare the 2021 journal
entry to adjust the accounts to reflect the average cost
method.
2. What is the effect of the change in methods on
2021 net income?
Ignoring income taxes, prepare the 2021 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.)
| No | Transaction | General Journal | Debit | Credit |
|---|---|---|---|---|
| 1 | 1 | Retained earnings | ||
| Inventory |
What is the effect of the change in methods on 2021 net income?
|
||||||||||||||||||||||||
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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:...
The Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception
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: Additional Information: 1. The company’s effective income tax rate is 25% for all years. 2. If the company had used the average cost method prior to 2021, ending inventory for 2020 would have been $130,000. 3. 7,000 units remained in...
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 2021, the company decided to switch to the average cost method.
Data for 2021 are as follows:
Beginning inventory, FIFO (6,900 units @ $25)
$
172,500
Purchases:
6,900 units @ $31
$
213,900
6,900 units @ $35
241,500
455,400
Cost of goods available for sale
$
627,900
Sales for 2018 (8,000 units @ $60)
$
480,000
Additional Information:...
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...
Taylor Corporation has used a periodic inventory system and the LIFO cost method since its inception...
Taylor Corporation has
used a periodic inventory system and the LIFO cost method since its
inception in 2011. The company began 2018 with the following
inventory layers (listed in chronological order of
acquisition):
15,000 units @
$10
$
150,000
20,000 units @
$15
300,000
Beginning
inventory
$
450,000
During 2018, 40,000 units were purchased for $20 per unit. Due to
unexpected demand for the company's product, 2018 sales totaled
49,000 units at various prices, leaving 26,000 units in ending
inventory....
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...
PART 1: The Churchill Corporation uses a periodic inventory system and the LIFO inventory cost method...
PART 1: The Churchill Corporation uses a
periodic inventory system and the LIFO inventory cost method for
its one product. Beginning inventory of 24,000 units consisted of
the following, listed in chronological order of acquisition:
14,000 units at a cost of $9.00 per unit = $126,000
10,000 units at a cost of $10.00 per unit = 100,000
During 2021, inventory quantity declined by 14,000 units. All units
purchased during 2021 cost $13.00 per unit.
Required:
Calculate the before-tax LIFO liquidation...
Cansela Corporation uses a periodic inventory system and the LIFO method to value its inventory. The...
Cansela Corporation uses a periodic inventory system and the
LIFO method to value its inventory. The company began 2018 with
inventory of 5,600 units of its only product. The beginning
inventory balance of $75,600 consisted of the following
layers:
2,100 units at $11 per unit
=
$
23,100
3,500 units at $15 per unit
=
52,500
Beginning inventory
$
75,600
During the three years 2018–2020, the cost of inventory remained
constant at $17 per unit. Unit purchases and...
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