Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of
Question:
Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1979. In 2021, the company decided to switch to the average cost method. Data for 2021 are as follows:
Additional Information:a. The company?s effective income tax rate is 40% for all years.b. If the company had used the average cost method prior to 2021, ending inventory for 2020 would have been $130,000.c. 7,000 units remained in inventory at the end of 2021.
Required:1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method.2. What is the effect of the change in methods on 2021 net income?
Ending InventoryThe ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas