Following is the net income of Benchley Instrument AG, a private company, computed under the two inventory methods using a periodic system.

Instructions

(Ignore tax considerations.)

a. Assume that in 2022 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 2022, and show net income reported for 2019, 2020, 2021, and 2022.

b. Assume that in 2022 Benchley, which had been using the average-cost method since beginning operations in 2019, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2022, and show net income reported for 2019, 2020, 2021, and 2022.

Transcribed Image Text:

FIFO Average-Cost 2019 €26,00o €23,000 2020 30,000 25,000 2021 29,00o 27,000 2022 34,000 30,000