Tulip Company decided to change from LIFO to FIFO inventory costing, effective January 1, 2020. The following data were available: Year Pretax Operating Excess of FIFO Ending Inventory over LIFO Ending Income using LIFO Inventory 2020 $40,000 $8,000 2019 20,000 7,000 2018 30,000 4,000 The income tax rate is 35%. The company began operations on January 1, 2018, and has paid no dividends since inception. Required: Answer the following questions relating to the 2019-2020 comparative financial statements. a. What is net income for 2020? b. What is restated net income for 2019? C. Prepare the 2019 statement of retained earnings as it would appear in the comparative 2019-2020 financial statements.

Tulip Company decided to change from LIFO to FIFO inventory costing, effective January 1, 2020. The following data were available: Year Pretax Operating Excess of FIFO Ending Inventory over LIFO Ending Income using LIFO Inventory 2020 $40,000 $8,000 2019 20,000 7,000 2018 30,000 4,000 The income tax rate is 35%. The company began operations on January 1, 2018, and has paid no dividends since inception. Required: Answer the following questions relating to the 2019-2020 comparative financial statements. a. What is net income for 2020? b. What is restated net income for 2019? C. Prepare the 2019 statement of retained earnings as it would appear in the comparative 2019-2020 financial statements.

Name: Tulip Company decided to change from LIFO to FIFO inventory costing,e
Uploaded: 2024-03-20T06:32:37.000Z
Channel: Bartleby
Description: Tulip Company decided to change from LIFO to FIFO inventory costing,effective January 1, 2020. The following data were available:YearPretax OperatingExcess of FIFO EndingInventoryIncome usingLIFOover LIFO EndingInventory2020$40,000$8,000201920,0007,

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Amber Corporation reported income from continuing operations of $1,600,000 (after taxes) for the fiscal year ended December 31, 2020. The following information, which has not yet been considered or included in the above figure, has been revealed as well: 1. On December31, 2020, Amber adopted the FIFO cost method of inventory valuation. The company had previously used the average method. The change increased income for 2020 by $50,000 (pre-tax) and the cumulative effect of the change on prior years' income was a $60,000 (pre-tax) increase. Some equipment was sold for $100,000 cash during the year at a time when its book value was $140,000. (Depreciation has been correctly recorded.) 2. 3. Amber decided to discontinue its microchip division in 2020. During the current year, the loss on the disposal of this segment was $250,000 (before applicable taxes). Instructions Present in good form the income statement of Amber Corporation for 2020 starting with "Income from continuing operations…
In March 2015, XYZ Corp. purchased an item of inventory for $30. By June, that item could be purchased for $26 and re-sold for $31. XYZ's normal profit for the item is $4. At what amount should XYZ report the item in its June 30 balance sheet? XYZ uses the LIFO inventory cost flow assumption. (omit , and $ in the answer) 30
Carswell Electronics adopted the dollar-value LIFO method on January 1, 2018, when the inventory value ofits one inventory pool was $720,000. The company decided to use an external index, the Consumer Price Index(CPI), to adjust for changes in the cost level. On January 1, 2018, the CPI was 240. On December 31, 2018, inventory valued at year-end cost was $880,000 and the CPI was 264.Required:Calculate the inventory value at the end of 2018 using the dollar-value LIFO method.
ABC Company experienced a decline in the value of its inventory in 2020 which resulted in a write-down from a cost of P2.400,000 to net realizable value of P1,650,000. The entity's practice is to use the allowance method in recording necessary adjustments. In 2021, market conditions have improved and on December 31, 2021, the inventory had a cost of P4,200,000 and net realizable value of 3,750.000. Compute for the amount of gain on reversal of inventory write-down on December 31,2021.
On January 1, 2023 , Linda Corp. changed from the average cost to the dollar value LIFO method for accounting for inventory. The change results in a decrease in ending inventory of $45,497,000 for the year. How should the effect of this change be reported by Linda Corp. in 2023? (RE& CF 1) As an increase to beginning RE of $ 45,497,000 As a decrease to beginning RE of $45,497,000 As an increase to net income of $45,497,000 As a decrease to net income of $45,497,000
Flay Foods has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2021, Flay decided to change to the LIFO method. As a result of the change, net income in 2021 was $76 million. If the company had used LIFO in 2020, its cost of goods sold would have been higher by $7 million that year. Flay's records of inventory purchases and sales are not available for 2019 and several previous years. Last year, Flay reported the following net income amounts in its comparative income statements: ($ in millions) Net income 2018 2019 2020 $76 $78 $80 Required: 1. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. (Ignore income taxes.) 3. What amounts will Flay report for net income in its 2019-2021 comparative income statements?
The following information was available for Bramble Company at December 31, 2020: beginning inventory $4000; ending inventory $96000; cost of goods sold $2500000; and sales $1280000. Bramble's days in inventory in 2020 was O 0.6 days. O 14.3 days. O 7.3 days. O 14.0 days. Save for Later Attempts: 0 of 1 used Submit Answer
Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the beginning 2021. The inventory as reported at the end of 2020 using LIFO would have been $66.000 higher using FIFO. Retained earnings at th end of 2020 was reported as $840,000 (reflecting the LIFO method). The tax rate is 40%. Required: 1. Calculate the balance in retained earnings at the time of the change (beginning of 2021) as it would have been reported if FIFO had been used in prior years. 2. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle. Complete this question by entering your answers in the tabs below.
The January 28, 2020 (fiscal year 2019) financial statements of Firm C reported the following information: FY2019 FY2018 Revenues $2,839,702 $2,314,449 Cost of sales $2,042,600 $1,860,000 Inventories, net 520,000 540,000 LIFO reserve 8,000 6,000 If Firm C had used the FIFO method of inventory costing, the FY2019 inventory turnover ratio would have been: (Round your answer to two decimal places. For example, if your answer is 6.3276, type in “6.33")
Heinz Company began operations on January 1, 2019, and uses the FIFO method in costing its raw material inventory. Management is contemplating a change to the LIFO method and is interested in determining what effect such a change will have on net income. Accordingly, the following information has been developed:Final Inventory 2019 2020FIFO ₱640,000 ₱ 712,000LIFO 560,000 636,000Net Income (computed under the FIFO method) 980,000 1,030,000Based on the above information, a change to the LIFO method in 2020 would result in net income for 2020 ofa. ₱1,070,000 c. ₱954,000b. ₱1,030,000 d. ₱950,000
Tulip Company decided to change from LIFO to FIFO inventory costing, effective January 1, 2020. The following data were available: Year Pretax Operating Excess of FIFO Ending Inventory Income using LIFO over LIFO Ending Inventory 2020 $40,000 $8,000 2019 20,000 7,000 2018 30,000 4,000 The income tax rate is 35%. The company began operations on January 1, 2018, and has paid no dividends since inception. Required: Answer the following questions relating to the 2019-2020 comparative financial statements. a. What is net income for 2020? b. What is restated net income for 2019? c. Prepare the 2019 statement of retained earnings as it would appear in the comparative 2019-2020 financial statements.
In 2021, Hopyard Lumber changed its inventory method from LIFO to FIFO. Inventory at the end of 2020 of $123,000 would have been $137,000 if FIFO had been used. Inventory at the end of 2021 is $150,000 using the new FIFO method but would have been $145,000 if the company had continued to use LIFO. What is the effect of the change on 2021 cost of goods sold?