Below is the net income of Anita Ferreri Instrument Co., a private corporation, computed under the three inventory methods using a periodic system.   FIFO Average-Cost LIFO 2018 $26,000 $24,000 $20,000 2019   30,000   25,000   21,000 2020   28,000   27,000   24,000 2021   34,000   30,000   26,000 Instructions (Ignore tax considerations.) a.    Assume that in 2021 Ferreri decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2021, and show net income reported for 2018, 2019, 2020, and 2021. b.    Assume that in 2021 Ferreri, which had been using the LIFO method since incorporation in 2018, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2021 and show net income reported for 2018, 2019, 2020, and 2021.

Question

Below is the net income of Anita Ferreri Instrument Co., a private corporation, computed under the three inventory methods using a periodic system.

 
FIFO
Average-Cost
LIFO
2018
$26,000
$24,000
$20,000
2019
  30,000
  25,000
  21,000
2020
  28,000
  27,000
  24,000
2021
  34,000
  30,000
  26,000

Instructions

(Ignore tax considerations.)

a.    Assume that in 2021 Ferreri decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2021, and show net income reported for 2018, 2019, 2020, and 2021.

b.    Assume that in 2021 Ferreri, which had been using the LIFO method since incorporation in 2018, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2021 and show net income reported for 2018, 2019, 2020, and 2021.

 

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