During 2023, Jean Bedard Company decided to change the inventory costing method used from LIFO to...
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During 2023, Jean Bedard Company decided to change the inventory costing method used from LIFO to FIFO. Assume that they also made this change for income tax purposes. This is a realistic assumption due to the IRS LIFO conformity rule. During 2022, Jean Bedard declared dividends in the amount of $300,000. In 2023, this amount was $200,000. The 2022 LIFO basis net income was $4,000,000. The 2023 FIFO net income was $4,500,000. The marginal tax rate is 20%. There are 700,000 common shares outstanding. Inventory as of 1/1/2022. Inventory as of 12/31/2022 Inventory as of 12/31/2023 REQUIRED: LIFO $1,000,000 2,000,000 2,200,000 FIFO $1,500,000 3,500,000 3,800,000 1. Give the entry(s) to record the effect of the change. 2. Determine what numbers will be reported for the 2023 comparative (2022 and 2023) financial statements for inventory, retained earnings, net income, and earnings per share. Assume that the January 1, 2022 retained earnings balance under LIFO is $6,000,000. During 2023, Jean Bedard Company decided to change the inventory costing method used from LIFO to FIFO. Assume that they also made this change for income tax purposes. This is a realistic assumption due to the IRS LIFO conformity rule. During 2022, Jean Bedard declared dividends in the amount of $300,000. In 2023, this amount was $200,000. The 2022 LIFO basis net income was $4,000,000. The 2023 FIFO net income was $4,500,000. The marginal tax rate is 20%. There are 700,000 common shares outstanding. Inventory as of 1/1/2022. Inventory as of 12/31/2022 Inventory as of 12/31/2023 REQUIRED: LIFO $1,000,000 2,000,000 2,200,000 FIFO $1,500,000 3,500,000 3,800,000 1. Give the entry(s) to record the effect of the change. 2. Determine what numbers will be reported for the 2023 comparative (2022 and 2023) financial statements for inventory, retained earnings, net income, and earnings per share. Assume that the January 1, 2022 retained earnings balance under LIFO is $6,000,000.
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This problem involves a shift in inventory accounting from LIFO LastIn FirstOut to FIFO FirstIn FirstOut and the retrospective restatement that must b... View the full answer
Related Book For
Intermediate Accounting Volume 2
ISBN: 9781260881240
8th Edition
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel
Posted Date:
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