Cannect CSecure httpnewconnectmheducstion.com/fow/connect.htm Cnapter 20 Help Sa
ID: 2526168 • Letter: C
Question
Cannect CSecure httpnewconnectmheducstion.com/fow/connect.htm Cnapter 20 Help Save&Exit; Submit Check my work The Cecil Bocker Vending Company chaiged its method of valuing inventory from the average cost method to the FiFO cost method at the bog ning of 2018. At December 31. 2017, nventorics were $129000 (average cost basls and were $133,000 a ycar carller Cecil-Booker's acecouritants determined that the inventones would have tataled S173,000 at Dece mber 31, 2017, ad 178000 at Uecember 31, 2016, it detennined on a FIFO basis. A tax rate ot 40% is in effect tor all years. pont One hundred thousand commen shares were outstanding each yeer. Incorme from continuing operations was 5190000 in 2017 and 55000 In 2018. There ware no discontinued operations clther ycar Required: 1. Prepare the jaurnal entry to racond th rhangr in arcounting principle 2. Prepare the 2018 2017 comparative income statemens beginning with income frm contnuing operations. Include per share amount3 Complete this question by entering your ansvers in the tabs below. Reference Prepare the joumal entry to record the change in accounting principle. (If no entry is required for a transaction event, select No jtumal ntry reired in the it account fieln. ournal entry worksheet Record the change in accounting principle. 1224PM arch ViindowsExplanation / Answer
1) Inventory 44000
Income tax payable 17600
Retained earnings 26400
Inventory = 173000 - 129000 = 44000
Income tax payable = 44000 x 40% = 17600
2) Comparative income statement
Income before taxes (2017)
178000 - 133000 = 45000 increase in 2017 beginning inventory
173000 - 129000 = (44000) Increase in 2017 ending inventory
= 1000 increase in cost of goods sold / decrease in income
2018 2017 Income before taxes 490,000 614000 Income tax expense (40%) 196000 245600 Net income 294000 368400 Earnings per common share 2.94 3.684