Gordon Company started operations on January 1, 2015, and has used the FIFO method of inventory valuation

Question:

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 provided with the following information.

Instructions

a. What is the beginning retained earnings balance at January 1, 2017, if Gordon prepares comparative financial statements starting in 2017?

b. What is the beginning retained earnings balance at January 1, 2020, if Gordon prepares comparative financial statements starting in 2020?

c. What is the beginning retained earnings balance at January 1, 2021, if Gordon prepares single-period financial statements for 2021?

d. What is the net income reported by Gordon in the 2020 income statement if it prepares comparative financial statements starting with 2018?

Financial Statements
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Related Book For answer-question

Intermediate Accounting

ISBN: 978-1119503668

17th edition

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

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Question Posted: Dec 10, 2019 11:44 AM

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Gordon Company started operations on January 1, 2015, and has used the FIFO method of inventory valuation

Question:

Retained Earnings (Ending Balance) Under FIFO $100,000 Net Income Under FIFO Under Average-Cost 2015 2016 2017 2018 2019 2020 $100,000 70,000 $ 90,000 65,000 160,000 90,000 80,000 340,000 590,000 120,000 130,000 305,000 310,000 780,000

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a 2017 Retained earnings January 1 as reported 160000 Cumulative effect of change in accountin...View the full answer

Intermediate Accounting

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