Shown below are net income amounts as they would be determined by Roberti Steel Company by each of three different inventory costing methods ($ in thousands).

Required:
1. Assume that Roberti used FIFO before 2024, and then in 2024 decided to switch to average cost. Prepare the journal entry to record the change in accounting principle and briefly describe any other steps Roberti should take to appropriately report the situation. (Ignore income tax effects.)
2. Assume that Roberti used FIFO before 2024, and then in 2024 decided to switch to LIFO. Assume accounting records are inadequate to determine LIFO information prior to 2024. Therefore, the 2023 ($540) and pre- 2023 ($2,280) data are not available. Prepare the journal entry to record the change in accounting principle and briefly describe any other steps Roberti should take to appropriately report the situation. (Ignore income tax effects.)

3. Assume that Roberti used FIFO before 2024, and then in 2024 decided to switch to LIFO cost. Roberti’s records of inventory purchases and sales are not available for several previous years. Therefore, the pre-2023 LIFO information ($2,280) is not available. However, Roberti does have the information needed to apply LIFO on a prospective basis beginning in 2023. Prepare the journal entry to record the change in accounting principle, and briefly describe any other steps Roberti should take to appropriately report the situation. (Ignore income tax effects.)

Transcribed Image Text:

Pre-2023 2023 FIFO $2,800 750 $3,550 Average Cost $2,540 600 $3,140 LIFO $2,280 540 $2,820