Question: Gordon Company started operations on January 1, 2002, and has used the FIFO method of inventory valuation since its inception. In 2008, it decides to

Gordon Company started operations on January 1, 2002, and has used the FIFO method of inventory valuation since its inception. In 2008, it decides to switch to the average-cost method. You are provided with the following information.

Instructions
(a) What is the beginning retained earnings balance at January 1, 2004, if Gordon prepares comparative financial statements starting in 2004?
(b) What is the beginning retained earnings balance at January 1, 2007, if Gordon prepares comparative financial statements starting in 2007?
(c) What is the beginning retained earnings balance at January 1, 2008, if Gordon prepares single-period financial statements for 2008?
(d) What is the net income reported by Gordon in the 2007 income statement if it prepares comparative financial statements starting with2005?

Net Income 2002 2003 2004 2005 2006 2007 Under FIFO $100,000 70,000 90,000 120,000 300,000 305,000 Under Average-Cost $90,000 65,000 80,000 130,000 290,000 310,000 Retained Earnings (Ending balance) Under FIFC $100,000 160,000 235,000 340,000 590,000 780,000

Step by Step Solution

★★★★★

3.42 Rating (168 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a Retained earnings January 1 as reported 160000 Cumulative effect of chan... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

117-B-A-R-B (100).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

Hannah is 12 month old who is relatively new to your child care center. She has been at the center for 2 weeks. When Hannah and her mother arrive at the center, Hannah is smiling and relaxed. Once...

Gordon Company started operations on January 1, 2009, and has used the FIFO method of inventory valuation since its inception. In 2015, it decides to switch to the average-cost method. You are...

Accounting Change Linden Company started operations on January 1, 2006, and has used the FIFO method of inventory valuation since its inception. In 2012, it decides to switch to the average cost...

Goddard Company has used the FIFO method of inventory valuation since it began operations in 2008. Goddard decided to change to the average cost method for determining inventory costs at the...

Gordon Company started operations on January 1, 2015, and has used the FIFO method of inventory valuation since its inception. In 2021, it decides to switch to the average-cost method. You are...

Linden Company started operations on January 1, 2008, and has used the FIFO method of inventory valuation since its inception. In 2014, it decides to switch to the average cost method. You are...

Gordon Company started operations on January 1, 2009, and has used the FIFO method of inventory valuation since its inception. In 2014, it decides to switch to the average cost method. You are...

Question 4 of 11 2015 2016 Sage Company started operations on January 1, 2015, and has used the FIFO method of inventory valuation since its inception. In 2021, it decides to switch to the...

Larkspur Company started operations on January 1, 2015, and has used the FIFO method of inventory valuation since its inception. In 2021, it decides to switch to the average-cost method. You are...

(Accounting Change) Gordon Company started operations on January 1, 2002, and has used the FIFO method of inventory valuation since its inception. In 2008, it decides to switch to the average cost...

Sheffield Company started operations on January 1, 2015, and has used the FIFO method of inventory valuation since its inception. In 2021, it decides to switch to the average-cost method. You are...

A governments interest expenditure, as reported in its debt service fund, differs significantly from its interest expense, as reported in its government-wide statements. What is the most likely...

A quality cost report reveals the magnitude of the quality costs by category, and it also shows the relative distribution of these costs. The relative distribution allows the manager to assess the...

tion 1 6 Since low - cost carriers entered the market, a new and vast market for was created. of red out of , Select one: a . discretionary travel b . group travel c . family travel d . business...

CCC Partnership borrowed $100,000 on a five-year recourse note from a local bank. It also purchased land for $60,000, putting $10,000 down and signing a qualified nonrecourse loan secured by the land...

Elvis Presley, a rock n roll singer, became a musical icon during a career that spanned more than twenty years, until he died at the age of 42. Many companies and individuals own copyrights to...

The following data (in millions) were adapted from recent financial statements of Tootsie Roll Industries Inc.: Sales ............$533 Cost of goods sold ..... 366 Net income ........ 44 Interest...

Tyrell Co. entered into the following transactions involving short-term liabilities in 2016 and 2017. 2016 Apr. 20 Purchased $40,250 of merchandise on credit from Locust, terms n30. Tyrell uses the...

Victoria Berridge, Robert Cook, Robert Walsh, and the pilot, Scott Cowan, boarded a Twin Otter airplane for a skydiving expedition. Shortly after takeoff, the right engine failed, and the airplane...

Discarding an asset On March 31, 2013, Alternative Landscapes discarded equipment that had a cost of $20,000. Accumulated Depreciation as of December 31, 2012, was $18,000. Assume annual depreciation...

The following T account is a summary of the cash account of Edmonds Company. What amount of net cash provided (used) by financing activities should be reported in the statement of cashflows? Cash...

Access the FASB Codification at asc.fasb.org to prepare responses to the following. Use the Master Glossary to determine the proper definitions. (a) What are cash equivalents? (b) What are financing...

You are considering an investment in a new start-up company, Steamboat IQ Inc., an Internet service provider. A review of the companys financial statements reveals a negative retained earnings. In...

NBC company is expected to pay a $ 2 . 5 0 per share dividend at the end of this year ( i . e . , D 1 = $ 2 . 5 0 ) . The dividend is expected to grow at a constant rate of 5 % a year from the...

Frank Co. is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $25 unit. The unit cost for Frank Co. to make the part is $30, which...

Which investment below would be most appropriate for investors who need income? A. International stocks B. DOW Index Funf (DIA) C. Disney and Exxom Moble stocks D. Dividend Paying ETFs E. A, B, D are...