s During 2022 (its first year of operations) and 2023, Fieri Foods used theFIFO inventory costing method for both financial reporting and taxpurposes. At the beginning of 2024, Fieri decided to change to the averagemethod for both financial reporting and tax purposes.Income components before income tax for 2022, 2023, and 2024 were asfollows:($ in millions)RevenuesCost of goods sold (FIFO)Cost of goods sold (average)Operating expenses2022$ 510(51)(78)(294)20232024$ 520$ 550(53)(59)(82)(88)(302) (306)Dividends of $32 million were paid each year. Fieri's fiscal year endsDecember 31.Required:1. Prepare the journal entry at the beginning of 2024 to record the changein 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, asFieri reported using FIFO method and determine the adjustment of balancein retained earnings as on January 1, 2023 using average method insteadof FIFO method.

Journal entries are made to record the transactions as the first process in the books of accounts…

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 Cost of goods sold (FIFO) Cost of goods sold (average) Operating expenses 2022 $ 510 (51) (78) (294) 2023 $ 520 (53) (82) (302) 2024 $ 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 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.

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 Cost of goods sold (FIFO) Cost of goods sold (average) Operating expenses 2022 $ 510 (51) (78) (294) 2023 $ 520 (53) (82) (302) 2024 $ 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 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.

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

Problem 3P: Koopman Company began operations on January 1, 2018, and uses they FIFO inventory method for...

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Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.
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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) Revenues Cost of goods sold (FIFO) Cost of goods sold (average) Operating expenses 2822 2823 2024 $ 580 $ 590 $ 620 (58) (68) (66) (92) (96) (102) (322) (338) (334) Dividends of $39 million were paid each year. Fieri's fiscal year ends December 31. Required: 1. Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. (Ignore income taxes.) 2. Prepare the 2024-2023 comparative income statements. 3. & 4. Determine the balance in retained earnings at January 1, 2023, as Fieri reported using FIFO method and determine the adjustment of balance in retained earnings as on January 1, 2023 using…
During 2022 (its first year of operations) and 2023, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2024, Fieri decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2022, 2023, and 2024 were as follows: ($ 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 $24 million were paid each year. Fieri’s fiscal year ends December 31. Questions 1 & 2 Determine the balance in retained earnings at January 1, 2023, as Fieri reported using FIFO method and determine the adjustment of balance in retained earnings as on January 1, 2023 using average method instead of FIFO method.
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During 2019 (its first year of operations) and 2020, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Fieri decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2019, 2020, and 2021 were as follows: ($ in millions) Revenues Cost of goods sold (FIFO) Cost of goods sold (average) Operating expenses 2019 2020 $ 520 $ 510 (51) (78) (294) 2021 $ 550 (53) (82) (302) (306) (59) (88) Dividends of $32 million were paid each year. Fieri's fiscal year ends December 31. Required: 1. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) 2. Prepare the 2021-2020 comparative income statements. 3. & 4. Determine the balance in retained earnings at January 1, 2020 as Fieri reported using FIFO method and determine the adjustment of balance in retained earnings as on January 1, 2020 using…
During 2019 (its first year of operations) and 2020, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Fieri decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2019, 2020, and 2021 were as follows: ($ in millions) 2019 2020 2021 Revenues $ 380 $ 390 $ 420 Cost of goods sold (FIFO) (38 ) (40 ) (46 ) Cost of goods sold (average) (52 ) (56 ) (62 ) Operating expenses (242 ) (250 ) (254 ) Dividends of $20 million were paid each year. Fieri’s fiscal year ends December 31. Required: 1. Prepare the journal entry at the beginning of 2021 to record
During 2019 (its first year of operations) and 2020, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Fieri decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2019, 2020, and 2021 were as follows: ($ in millions) 2019 2020 2021 Revenues $ 380 $ 390 $ 420 Cost of goods sold (FIFO) (38 ) (40 ) (46 ) Cost of goods sold (average) (52 ) (56 ) (62 ) Operating expenses (242 ) (250 ) (254 ) Dividends of $20 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 the adjustment of balance…