In 2024, CPS Company changed its method of valuing inventory from the FIFO method to the average
Question:
In 2024, CPS Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2023, CPS’s inventories were $32 million (FIFO). CPS’s records indicated that the inventories would have totaled $23.8 million at December 31, 2023, if determined on an average cost basis.
Required:
1. Prepare the journal entry to record the adjustment. (Ignore income taxes.)
2. Briefly describe other steps CPS should take to report the change.
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Requirement 1 To record the change in millions Retained earnings 82 Inventory 32 million 238 million ...View the full answer
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