Juliana Corporation was incorporated on January 2, 2020 with an initial capitalization of $250,000 (50,000 shares...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Juliana Corporation was incorporated on January 2, 2020 with an initial capitalization of $250,000 (50,000 shares of common stock). The company has been using the LIFO method of inventory valuation since inception. At the beginning of 2022, company management decided to switch to the FIFO method because it is used by all other companies in the industry. The accounting entry to make this accounting change to FIFO was made on January 1, 2022. Julie Sharp, Controller, prepared the preliminary 2022 financial statements using FIFO for the 2022 financial statements. The following financial information includes the published financial information for the years ending December 31, 2021 and 2020 and the preliminary financial information compiled by Julie for the year ended December 31, 2022. Balance Sheet: (FIFO) 2022 (LIFO) 2021 (LIFO) 2020 Assets: 85,000 55,000 335,000 101,818 576,818 70,000 50,000 275,000 130,909 525,909 50,000 35,000 260,000 163,636 508,636 Cash Accounts Receivable Inventory Fixed Assets - Net Total Assets Liabilities and Shareholders' Equity: Accounts Payable Long-Term Debt Total Liabilities 25,000 27,375 52,375 40,000 92,500 132,500 50,000 145,000 195,000 Common Stock - Par Additional Paid-in Capital Retained Earnings Total Shareholders' Equity 5,000 245,000 274,443 524,443 5,000 245,000 143.409 393,409 5,000 245,000 63,636 313,636 Total Liabilities and Shareholders' Equity 576,818 525,909 508,636 Income Statement: Sales 1,210,000 837,000 373,000 1,100,000 770,000 330,000 1,000,000 _700,000 300,000 Cost of Goods Sold Gross Margin 157,500 60,000 32,727 250,227 Salaries Other Operating Expenses Depreciation Total Expenses 165,375 82,500 29,091 276,966 150,000 50,000 36,364 236,364 Net Income 96,034 79,773 63,636 Earnings Per Share 1.92 1.60 1.27 Required: Assume that year-end inventory values are as follows: FIFO LIFO 2022: 2021: 2020: $ 335,000 310,000 285,000 $ 290,000 275,000 260,000 What accounting entry did Julie Sharp make on January 1, 2022 for the change in inventory method? In addition, prepare the appropriate comparative three-year income statements and balance sheets and the appropriate footnote disclosure in accordance with the proposed new accounting standard. (Assume no income taxes.) Finally, prepare a retained earnings statement under 2 assumptions: (a) just two years shown in comparatives (2021 and 2022), (b) three-year comparatives shown (2020, 2021, and 2022). That retained earnings statement is the tricky one, so that's why I'm asking you to do it both ways. Juliana Corporation was incorporated on January 2, 2020 with an initial capitalization of $250,000 (50,000 shares of common stock). The company has been using the LIFO method of inventory valuation since inception. At the beginning of 2022, company management decided to switch to the FIFO method because it is used by all other companies in the industry. The accounting entry to make this accounting change to FIFO was made on January 1, 2022. Julie Sharp, Controller, prepared the preliminary 2022 financial statements using FIFO for the 2022 financial statements. The following financial information includes the published financial information for the years ending December 31, 2021 and 2020 and the preliminary financial information compiled by Julie for the year ended December 31, 2022. Balance Sheet: (FIFO) 2022 (LIFO) 2021 (LIFO) 2020 Assets: 85,000 55,000 335,000 101,818 576,818 70,000 50,000 275,000 130,909 525,909 50,000 35,000 260,000 163,636 508,636 Cash Accounts Receivable Inventory Fixed Assets - Net Total Assets Liabilities and Shareholders' Equity: Accounts Payable Long-Term Debt Total Liabilities 25,000 27,375 52,375 40,000 92,500 132,500 50,000 145,000 195,000 Common Stock - Par Additional Paid-in Capital Retained Earnings Total Shareholders' Equity 5,000 245,000 274,443 524,443 5,000 245,000 143.409 393,409 5,000 245,000 63,636 313,636 Total Liabilities and Shareholders' Equity 576,818 525,909 508,636 Income Statement: Sales 1,210,000 837,000 373,000 1,100,000 770,000 330,000 1,000,000 _700,000 300,000 Cost of Goods Sold Gross Margin 157,500 60,000 32,727 250,227 Salaries Other Operating Expenses Depreciation Total Expenses 165,375 82,500 29,091 276,966 150,000 50,000 36,364 236,364 Net Income 96,034 79,773 63,636 Earnings Per Share 1.92 1.60 1.27 Required: Assume that year-end inventory values are as follows: FIFO LIFO 2022: 2021: 2020: $ 335,000 310,000 285,000 $ 290,000 275,000 260,000 What accounting entry did Julie Sharp make on January 1, 2022 for the change in inventory method? In addition, prepare the appropriate comparative three-year income statements and balance sheets and the appropriate footnote disclosure in accordance with the proposed new accounting standard. (Assume no income taxes.) Finally, prepare a retained earnings statement under 2 assumptions: (a) just two years shown in comparatives (2021 and 2022), (b) three-year comparatives shown (2020, 2021, and 2022). That retained earnings statement is the tricky one, so that's why I'm asking you to do it both ways.
Expert Answer:
Answer rating: 100% (QA)
Solution Journal entries Due to the fact that the modification will take effect on January 1 2022 a journal entry will be needed to raise the opening inventory by 35000 units and the retained profits ... View the full answer
Posted Date:
Students also viewed these accounting questions
-
Total Protection Limited (TPL) was incorporated on January 1, Year 1, by five homebuilders in central Canada to provide warranty protection for new-home buyers. Each shareholder owns a 20% interest...
-
The city of Clinton was incorporated on January 1, 2014. On December 31, 2019, a careful study of the citys records revealed the following information regarding long-term debt: a. General obligation...
-
The Equitee Corporation was incorporated on January 2, 2010, with two classes of share capital: an unlimited number of common shares and $3 cumulative non-voting preferred shares with an authorized...
-
In Problems 1130, solve each equation by factoring. x 2 - 9x = 0
-
How are preferred shares "preferred"? Are dividends on preferred shares guaranteed? If the preferred shares have a cumulative feature, are the dividends guaranteed? Explain.
-
A driver states that she was doing 80 when stopped by the police. Is that a clear statement? Would this be interpreted differently in England than it would be in the United States? Explain.
-
The 2015 annual report of The Procter & Gamble Company (P&G) is available at www.pginvestor.com, After reviewing P&Gs annual report, respond to the following questions: a. Prepare a list of some of...
-
The data set agsrs.dat also contains information on the number of farms in 1987 for the SRS of n = 300 counties from the population of the N = 3078 counties in the United States (see Example 2.5). In...
-
In January 2022, Meggan acquired an office building in downtown Syracuse, NY, for $400,000. The building was constructed in 1932 and is a certified historic structure. Of the $400,000 cost, $40,000...
-
Office King Corporation manufactures three different models of paper shredders including the waste container that serves as the base. While the shredder heads are different for the three models, the...
-
From candy to jewelry to flowers, the average consumer was expected to spend $123.89 for Mothers Day 2009, according to an April 2009 National Retail Federations survey. Local merchants felt this...
-
BINOMIAL AND POISSON EXERCISES POISSON DISTRIBUTION A bank receives on average 6 fake checks per day, calculate the probability that five fake checks are received per day. Suppose that the average...
-
(a) Let F be any field. Prove that if a b = 0 for some a, b = F, then a = =0 or b = 0. (b) Let S = {ff: RR} be a set of all real-valued functions defined on R under the usual addition and...
-
Your university is running a special offer on tuition. This years tuition is 18,000. Next years tuition iw 19,080. They are offering to discount next years tuition by 6% if you agree to pay both...
-
The height of a projectile fired upward with an initial velocity of 160 feet per seco is given by the formula h=-16t^(2)+160t where h is the height in feet and t is the time in seconds. Determine the...
-
Q2. Suppose that time series {X} is an AR(1) process Xt = axt-1 Wt, where 0 < a <1 and W is normalized standard white noise with Wt ~ N(0, 1). If we have observed X1 and X3, and we would like to...
-
Under the tax law in 2012, you could claim all of your charitable contributions as a deduction on your federal income tax (if you decided to itemize your deductions), and the top marginal tax rate...
-
What are the two components of a company's income tax provision? What does each component represent about a company's income tax provision?
-
Which of the following is the correct formula for return on sales? a. Income/Investment b. Investment/Income c. Income/Revenue d. Revenue/Investment
-
During the past twelve months, the Aaron Corporation had a net income of \($50,000\). What is the amount of the investment if the return on investment is 20%? a. \($100,000\) b. \($200,000\) c....
-
Distinguish between a profit center and a cost center.
Study smarter with the SolutionInn App