Exercise 20-1 (Algo) Change in principle; change in inventory methods [LO20-2] During 2022 (its first year of operations) and 2023, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2024, Fieri decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2022, 2023, and 2024 were as follows: ($ in millions) Revenues 2023 2022 $ 410 $ 420 (41) (43) (58) (62) (254) (262) 2024 $ 450 (49) (68) (266) Cost of goods sold (FIFO) Cost of goods sold (average) Operating expenses Dividends of $22 million were paid each year. Fieri's fiscal year ends December 31. Required: 1. Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. (Ignore income taxes.) 2. Prepare the 2024-2023 comparative income statements. 3. & 4. Determine the balance in retained earnings at January 1, 2023, as Fieri reported using FIFO method and determine the adjustment of balance in retained earnings as on January 1, 2023 using average method instead of FIFO method.

Exercise 20-1 (Algo) Change in principle; change in inventory methods [LO20-2] During 2022 (its first year of operations) and 2023, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2024, Fieri decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2022, 2023, and 2024 were as follows: ($ in millions) Revenues 2023 2022 $ 410 $ 420 (41) (43) (58) (62) (254) (262) 2024 $ 450 (49) (68) (266) Cost of goods sold (FIFO) Cost of goods sold (average) Operating expenses Dividends of $22 million were paid each year. Fieri's fiscal year ends December 31. Required: 1. Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. (Ignore income taxes.) 2. Prepare the 2024-2023 comparative income statements. 3. & 4. Determine the balance in retained earnings at January 1, 2023, as Fieri reported using FIFO method and determine the adjustment of balance in retained earnings as on January 1, 2023 using average method instead of FIFO method.

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Description: sa Exercise 20-1 (Algo) Change in principle; change in inventory methods [LO20-2]During 2022 (its first year of operations) and 2023, Fieri Foods used the FIFO inventory costing method for both financial reportingand tax purposes. At the beginning of

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

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Exercise 20-1 (Algo) Change in principle; change in inventory methods (LO20-2] During 2019 (its first year of operations) and 2020, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Fieri decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2019, 2020, and 2021 were as follows: ($ in millions) 2019 2020 2021 Revenues Cost of goods sold (FIFO) Cost of goods sold (average) Operating expenses $ 510 (51) (78) (294) $ 520 (53) (82) (302) $ 550 (59) (88) (306) Dividends of $32 million were paid each year. Fieri's fiscal year ends December 31. Required: 1. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) 2. Prepare the 2021–2020 comparative income statements. 3. & 4. Determine the balance in retained earnings at January 1, 2020 as Fieri reported using FIFO method and determine…
Exercise 20-1 (Algo) Change in principle; change in inventory methods [LO20-2] During 2019 (its first year of operations) and 2020, Fieri Foods used the FIFO inventory costing method for both financial report tax purposes. At the beginning of 2021, Fieri decided to change to the average method for both financial reporting and tax purp Income components before income tax for 2019, 2020, and 2021 were as follows: ($ in millions) 2019 2020 2021 $ 520 $ 550 (59) (88) (306) Revenues Cost of goods sold (FIFO) Cost of goods sold (average) Operating expenses $ 510 (51) (78) (294) (53) (82) (302) Dividends of $32 million were paid each year. Fieri's fiscal year ends December 31. Required: 1. Prepare the journal entry at the beginning of 2021 to record the change in accountin 2. Prepare the 2021-2020 comparative income statements. 3. & 4. Determine the balance in retained earnings at January 1, 2020 as Fieri reported using FIFO method and determine the adjustment of balance in retained earnings…
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During 2022 (its first year of operations) and 2023, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2024, Fieri decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2022, 2023, and 2024 were as follows: ($ in millions) 2022 2023 2024 Revenues $ 430 $ 440 $ 470 Cost of goods sold (FIFO) (43) (45) (51) Cost of goods sold (average) (62) (66) (72) Operating expenses (262) (270) (274) Dividends of $24 million were paid each year. Fieri’s fiscal year ends December 31. Questions 1 & 2 Determine the balance in retained earnings at January 1, 2023, as Fieri reported using FIFO method and determine the adjustment of balance in retained earnings as on January 1, 2023 using average method instead of FIFO method.
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