Carl Co. began operations in 2021. At the beginning of fiscal year 2023, Carl Co. decided to change its inventory costing method from LIFO to FIFO to improve the balance sheet presentation of inventory. The following information is available for Bob Co.'s inventory: Inventory at the end of 2022 valued under LIFO: $220,000 Inventory at the end of 2022 valued under FIFO: $240,000 To record the change from LIFO to FIFO at the beginning of fiscal year 2023, Bob Co. will make a journal entry that includes Answer a. a debit to Retained Earnings for $20,000. b. a credit to Cost of Goods Sold for $220,000. c. a credit to Inventory for $220,000. d. a debit to Inventory for $20,000.
Carl Co. began operations in 2021. At the beginning of fiscal year 2023, Carl Co. decided to change its inventory costing method from LIFO to FIFO to improve the balance sheet presentation of inventory. The following information is available for Bob Co.'s inventory: Inventory at the end of 2022 valued under LIFO: $220,000 Inventory at the end of 2022 valued under FIFO: $240,000 To record the change from LIFO to FIFO at the beginning of fiscal year 2023, Bob Co. will make a journal entry that includes Answer a. a debit to Retained Earnings for $20,000. b. a credit to Cost of Goods Sold for $220,000. c. a credit to Inventory for $220,000. d. a debit to Inventory for $20,000.
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
Chapter7: Inventories: Cost Measurement And Flow Assumptions
Section: Chapter Questions
Problem 11P: Olson Company adopted the dollar-value LIFO method for inventory valuation at the beginning of 2015....
Related questions
Question
Carl Co. began operations in 2021. At the beginning of fiscal year 2023, Carl Co. decided to change its inventory costing method from LIFO to FIFO to improve the balance sheet presentation of inventory. The following information is available for Bob Co.'s inventory:
- Inventory at the end of 2022 valued under LIFO: $220,000
- Inventory at the end of 2022 valued under FIFO: $240,000
To record the change from LIFO to FIFO at the beginning of fiscal year 2023, Bob Co. will make a
Answer
a.
a debit to Retained Earnings for $20,000.
b.
a credit to Cost of Goods Sold for $220,000.
c.
a credit to Inventory for $220,000.
d.
a debit to Inventory for $20,000.
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