Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Wolfgang decided to change to the LIFO method. Net income in 2021 was correctly stated as $130 million. If the company had used LIFO in 2020, its cost of goods sold would have been higher by $16 million that year. Company accountants are able to determine that the cumulative net income for all years prior to 2020 would have been lower by $43 million if LIFO had been used all along, but have insufficient information to determine specific effects of using LIFO in 2019. Last year, Wolfgang reported the following net income amounts in its comparative income statements: ($ in millions) Net income 2018 2019 2020 $130 $132 $134 Required: 1. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) 3. What amounts will Wolfgang report for net income in its 2019-2021 comparative income statements? Journal entry worksheet 1 Record the change in accounting principle. Note: Enter debits before credits. Event General Journal Debit Credit 1 Required 1 Required 3 What amounts will Wolfgang report for net income in its 2019-2021 comparative income statements? (Enter your ans millions (i.e., 10,000,000 should be entered as 10).) 2019 2020 2021 ($ in millions) Net income FIFO LIFO (revised) LIFO Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Wolfgang decided to change to the LIFO method. Net income in 2021 was correctly stated as $130 million. If the company had used LIFO in 2020, its cost of goods sold would have been higher by $16 million that year. Company accountants are able to determine that the cumulative net income for all years prior to 2020 would have been lower by $43 million if LIFO had been used all along, but have insufficient information to determine specific effects of using LIFO in 2019. Last year, Wolfgang reported the following net income amounts in its comparative income statements: ($ in millions) Net income 2018 2019 2020 $130 $132 $134 Required: 1. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) 3. What amounts will Wolfgang report for net income in its 2019-2021 comparative income statements? Journal entry worksheet 1 Record the change in accounting principle. Note: Enter debits before credits. Event General Journal Debit Credit 1 Required 1 Required 3 What amounts will Wolfgang report for net income in its 2019-2021 comparative income statements? (Enter your ans millions (i.e., 10,000,000 should be entered as 10).) 2019 2020 2021 ($ in millions) Net income FIFO LIFO (revised) LIFO
Expert Answer:
Related Book For
Intermediate Accounting
ISBN: 978-0078025839
9th edition
Authors: J. David Spiceland, James Sepe , Mark Nelson , Wayne Thomas
Posted Date:
Students also viewed these accounting questions
-
Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2018, Wolfgang decided to change to the LIFO method. Net income...
-
Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2011, Wolfgang decided to change to the LIFO method. Net income...
-
Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Wolfgang decided to change to the LIFO method. Net income...
-
The light bulbs produced by Edison Lighting Corporation last an average of 300 h. The life of the light bulbs is believed to follow a normal distribution with a standard deviation of 10. A customer...
-
A copper kettle contains water at 24C. When the water is heated to its boiling point of 100.0C, the volume of the kettle expands by 1.2 10-5 m3. Determine the volume of the kettle at 24C.
-
During a golf match, a certain number of points are awarded for each eagle and a different number for each birdie. No points are awarded for par, and a certain number of points are deducted for each...
-
Construct a side-by-side box-and-whisker plot for the four states. Do any of the median freshman class sizes appear to be the same? Do any appear to be different? In Exercises 2-5, use the sign test...
-
Paul Adams owns a health club in downtown Los Angeles. He charges his customers an annual fee of $500 and has an existing customer base of 600. Paul plans to raise the annual fee by 6 percent every...
-
A firm has been experiencing low profitability in recent years. Perform an analysis of the firm's financial position using the DuPont equation. The firm has no lease payments but has a $2 million...
-
Q4. Review the accounts receivable lead sheet memo and related workpapers (AR.3.1 to AR.3.4). Evaluate the auditors' tickmarks, comments, and explanations in the memo and on the lead sheet. Identify...
-
3.) Derive the expressions for the Range (R) and Time of Flight (T) for the following situation. In terms of v. , 0, Xo, yo and g. Hint: Solve for T using the quadratic equation e O yo O Time of...
-
who do you think sets the underlying ethical standards when the law is fuzzy on an issue? as business and societal issues develop in the future, how does your opinion in this area inform your...
-
how do i introduce low risk high reward for a new medical assistant supervisor role in an organization?
-
How do individual differences in cognitive styles, such as analytical versus intuitive thinking, impact problem-solving approaches and decision-making processes within teams ?
-
In Russian government, do you think that Russian Military Performance is good in warfare against Ukraine? Explain.
-
Why do you think the competing values framework is important to an organization's effectiveness? Describe the four profiles of the competing values framework. Identify one of the profiles and provide...
-
Ramada Company produces one golf cart model. A partially complete table of company costs follows: 1,500 2,500 $ 7 Number of golf carts produced and sold Total costs Variable costs Fixed costs per...
-
A stock has had returns of 8 percent, 26 percent, 14 percent, 17 percent, 31 percent, and 1 percent over the last six years. What are the arithmetic and geometric average returns for the stock?
-
At times, companies try to induce voluntary conversion by offering an added incentivemaybe cash, stock warrants, or a more favorable conversion ratio. How is such an inducement accounted for? How is...
-
This ones got me stumped, you say to no one in particular. First day on the job; Id better get it right. Its the classification of notes payable in the statement of cash flows that has you in doubt....
-
On March 31, 2018, the Herzog Company purchased a factory complete with machinery and equipment. The allocation of the total purchase price of $1,000,000 to the various types of assets along with...
-
2. Modifying organizational structure to fit the communication needs of the organization
-
1. Clarifying and defining jobs
-
8. Can paperwork regarding this job be eliminated?
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App