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The Strawser-Morris Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1985. In 2024, the company decided to change to the average cost method. Data for 2024 are as follows: Beginning inventory, FIFO (5,900 units @ $39.00) Purchases: 5,900 units @ $45.00 5,900 units @ $49.00 Cost of goods available for sale Sales for 2024 (9,800 units @ $79.00) $265,500 289,100 $ 230,100 554,600 $ 784,700 $ 774,200 Additional information: 1. The company's effective income tax rate is 25% for all years. 2. If the company had used the average cost method prior to 2024, ending inventory for 2023 would have been $206,500. 3. 7,900 units remained in inventory at the end of 2024. Required: 1. Prepare the journal entry at the beginning of 2024 to record the change in principle. 2. In the 2024-2022 comparative financial statements, what will be the amounts of cost of goods sold and inventory reported for 2024?

The Strawser-Morris Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1985. In 2024, the company decided to change to the average cost method. Data for 2024 are as follows: Beginning inventory, FIFO (5,900 units @ $39.00) Purchases: 5,900 units @ $45.00 5,900 units @ $49.00 Cost of goods available for sale Sales for 2024 (9,800 units @ $79.00) $265,500 289,100 $ 230,100 554,600 $ 784,700 $ 774,200 Additional information: 1. The company's effective income tax rate is 25% for all years. 2. If the company had used the average cost method prior to 2024, ending inventory for 2023 would have been $206,500. 3. 7,900 units remained in inventory at the end of 2024. Required: 1. Prepare the journal entry at the beginning of 2024 to record the change in principle. 2. In the 2024-2022 comparative financial statements, what will be the amounts of cost of goods sold and inventory reported for 2024?

FINANCIAL ACCOUNTING
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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The Strawser-Morris Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1985. In 2024, the company decided to change to the average cost method. Data for 2024 are as follows: Beginning inventory, FIFO (5,900 units @ $39.00) Purchases: 5,900 units @ $45.00 5,900 units @ $49.00 Cost of goods available for sale. Sales for 2024 (9,800 units @ $79.00) Additional information: $ 265,500 289,100 $ 230,100 554,600 $ 784,700 $ 774,200 1. The company's effective income tax rate is 25% for all years. 2. If the company had used the average cost method prior to 2024, ending inventory for 2023 would have been $206,500. 3. 7,900 units remained in inventory at the end of 2024. Required: 1. Prepare the journal entry at the beginning of 2024 to record the change in principle. 2. In the 2024-2022 comparative financial statements, what will be the amounts of cost of goods sold and inventory reported for 2024?
Transcribed Image Text:The Strawser-Morris Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1985. In 2024, the company decided to change to the average cost method. Data for 2024 are as follows: Beginning inventory, FIFO (5,900 units @ $39.00) Purchases: 5,900 units @ $45.00 5,900 units @ $49.00 Cost of goods available for sale. Sales for 2024 (9,800 units @ $79.00) Additional information: $ 265,500 289,100 $ 230,100 554,600 $ 784,700 $ 774,200 1. The company's effective income tax rate is 25% for all years. 2. If the company had used the average cost method prior to 2024, ending inventory for 2023 would have been $206,500. 3. 7,900 units remained in inventory at the end of 2024. Required: 1. Prepare the journal entry at the beginning of 2024 to record the change in principle. 2. In the 2024-2022 comparative financial statements, what will be the amounts of cost of goods sold and inventory reported for 2024?
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