Gordon Company started operations on January 1, 2009, and has used the FIFO method of inventory valuation

Question:

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 provided with the following information.

Net Income Retained Earnings (Ending Balance) Under FIFO Under FIFO Under Average-Cost $ 90,000 $100,000 70,000 $100,000

Instructions
(a) What is the beginning retained earnings balance at January 1, 2011, if Gordon prepares comparative financial statements starting in 2011?
(b) What is the beginning retained earnings balance at January 1, 2014, if Gordon prepares comparative financial statements starting in 2014?
(c) What is the beginning retained earnings balance at January 1, 2015, if Gordon prepares single period financial statements for 2015?
(d) What is the net income reported by Gordon in the 2014 income statement if it prepares comparative financial statements starting with 2012?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...

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Intermediate Accounting 2014 FASB Update

ISBN: 978-1118147290

15th edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

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Question Posted: Mar 01, 2018 03:53 AM

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Gordon Company started operations on January 1, 2009, and has used the FIFO method of inventory valuation

Question:

Net Income Retained Earnings (Ending Balance) Under FIFO Under FIFO Under Average-Cost $ 90,000 $100,000 70,000 $100,000 2009 65,000 235,000 340,000 590,000 2011 2012 2013 2014 120,000 130,000 290,000 310,000 305,000 780,000

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2011 a Retained earnings January 1 as reported 160000 Cumulative effect o...View the full answer

Intermediate Accounting 2014 FASB Update

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