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
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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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You work for Star walk limited, a large private organisation as the assistant financial controller. One of your duties is to reconcile the sales ledger each month. The ledger has failed to agree month after month. You strongly believe that it is associated with a number of bad debts being written off on the individual customer account but not included in the nominal ledger. You consider the differences to be material and have brought this to the attention of your superior officer who is the financial controller but he seems unwilling to act. You consider his behaviour as unethical. Required: a) Discuss how the above scenario would affect the financial statement of Star Walk Limited. b) As a professional accountant, discuss action(s) that you would take in this situation.
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