Rockwell Corporation uses a periodic Inventory system and has used the FIFO cost method since inception of the company in 1979. In 2024, the company decided to switch to the average cost method. Data for 2024 are as follows: Beginning inventory, FIFO (5,000 units @ $26) Purchases: 5,000 units @ $31 5,000 units @ $35 Cost of goods available for sale $ 130,000 $ 155,000 175,000 330,000 $ 460,000 $ 310,000 sales for 2024 (5,000 units @ $62) Additional Information: a. The company's effective Income tax rate is 25% for all years. b. If the company had used the average cost method prior to 2024, ending Inventory for 2023 would have been $120,000. c. 10,000 units remained in Inventory at the end of 2024. Required: 1. Ignoring Income taxes, prepare the 2024 journal entry to adjust the accounts to reflect the average cost method. 2. What is the effect of the change in methods on 2024 net Income? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the effect of the change in methods on 2024 net income? The effect of the change for the year 2024 is a in cost of goods in income before taxes and a(n) sold resulting in a in income after tax. < Required 1 Required 2 >

Rockwell Corporation uses a periodic Inventory system and has used the FIFO cost method since inception of the company in 1979. In 2024, the company decided to switch to the average cost method. Data for 2024 are as follows: Beginning inventory, FIFO (5,000 units @ $26) Purchases: 5,000 units @ $31 5,000 units @ $35 Cost of goods available for sale $ 130,000 $ 155,000 175,000 330,000 $ 460,000 $ 310,000 sales for 2024 (5,000 units @ $62) Additional Information: a. The company's effective Income tax rate is 25% for all years. b. If the company had used the average cost method prior to 2024, ending Inventory for 2023 would have been $120,000. c. 10,000 units remained in Inventory at the end of 2024. Required: 1. Ignoring Income taxes, prepare the 2024 journal entry to adjust the accounts to reflect the average cost method. 2. What is the effect of the change in methods on 2024 net Income? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the effect of the change in methods on 2024 net income? The effect of the change for the year 2024 is a in cost of goods in income before taxes and a(n) sold resulting in a in income after tax. < Required 1 Required 2 >

Name: None Rockwell Corporation uses a periodic Inventory system and has use
Uploaded: 2024-03-20T06:32:37.000Z
Channel: Bartleby
Description: None Rockwell Corporation uses a periodic Inventory system and has used the FIFO cost method since inception of thecompany in 1979. In 2024, the company decided to switch to the average cost method. Data for 2024 are asfollows:Beginning inventory, FI

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 67P

See similar textbooks

Similar questions

At December 31, 2019, the following information was available from Crisford Companys books: Sales for the year totaled 110,600; markdowns amounted to 1,400. Under the approximate lower of average cost or market retail method, Crisfords inventory at December 31, 2019, was: a. 30,800 b. 28.000 c. 21,560 d. 19,600
The moving average inventory cost flow assumption is applicable to which of the following inventory systems? Questions M7-6 and M7-7 are based on the following data: City Stationers Inc. had 200 calculators on hand on January 1, 2019, costing 18 each. Purchases and sales of calculators during the month of January were as follows: City uses a periodic inventory system. According to a physical count, 150 calculators were on hand at January 31, 2019.
Calculate the cost of goods sold dollar value for A67 Company for the month, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for weighted average (AVG).
Kulsrud Company would like to estimate the current inventory level. Using the gross profit method and the following information, estimate the current inventory level for Kulsrud Company. Goods available for sale 100,000 Net sales 150,000 Normal gross profit as a percent of sales 40%
Refer to the information for Morgan Inc. above. If Morgan uses a perpetual inventory system, what is the cost of ending inventory under FIFO at April 30? a. $32,500 b. $38,400 c. $63,600 d. $69,500
Assume your company uses the periodic inventory costing method, and the inventory count left out an entire warehouse of goods that were in stock at the end of the year, with a cost value of $222,000. How will this affect your net income in the current year? How will it affect next years net income?
Calculate the cost of goods sold dollar value for A74 Company for the sale on March 11, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average (AVG).
Calculate the cost of goods sold dollar value for A65 Company for the month, considering the following transactions under three different cost allocation methods and using perpetual inventory updating. Provide calculations for first-in, first-out (FIFO).
The cost of the inventory on January 31, 2019, under the FIFO method is: a. 400 b. 2,700 c. 3,100 d. 3,200
Refer to the information provided in RE8-4. If Paul Corporations inventory at January 1, 2019, had a cost and net realizable value of 300,000, prepare the journal entry to record the reductions to NRV for Paul Corporation assuming that Paul uses a periodic inventory system and the direct method. Paul Corporation uses FIFO and reports the following inventory information: Assuming Paul uses a perpetual inventory system and the direct method, prepare the journal entry to record the write-down of inventory.
Hurst Companys beginning inventory and purchases during the fiscal year ended December 31, 20-2, were as follows: There are 1,200 units of inventory on hand on December 31, 20-2. REQUIRED 1. Calculate the total amount to be assigned to the cost of goods sold for 20-2 and ending inventory on December 31 under each of the following periodic inventory methods: (a) FIFO (b) LIFO (c) Weighted-average (round calculations to two decimal places) 2. Assume that the market price per unit (cost to replace) of Hursts inventory on December 31 was 18. Calculate the total amount to be assigned to the ending inventory on December 31 under each of the following methods: (a) FIFO lower-of-cost-or-market (b) Weighted-average lower-of-cost-or-market 3. In addition to taking a physical inventory on December 31, Hurst decides to estimate the ending inventory and cost of goods sold. During the fiscal year ended December 31, 20-2, net sales of 100,000 were made at a normal gross profit rate of 35%. Use the gross profit method to estimate the cost of goods sold for the fiscal year ended December 31 and the inventory on December 31.
Reid Company uses the periodic inventory system. On January 1, it had an inventory balance of 250,000. During the year, it made 613,000 of net purchases. At the end of the year, a physical inventory showed it had ending inventory of 140,000. Calculate Reid Companys cost of goods sold for the year.