Below is the net income of Benchley Instrument Co., a private corporation, computed under the two inventory methods using a periodic system.

Instructions
(a) Assume that in 2011 Benchley decided to change from the FIFO method to the average cost method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2011, and show net income reported for 2008, 2009, 2010, and 2011.
(b) Assume that in 2011 Benchley, which had been using the average cost method since incorporation in 2008, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2011, and show net income reported for 2008, 2009, 2010, and2011.

Transcribed Image Text:

FIFO Average Cost 2008 26,000 2009 2010 2011 30,000 29,000 34,000 23,000 25,000 27,000 30,000