E4.14 (LO 3, 4) (Change in Accounting Principle) Zehms Company began operations in 2020 and adopted weighted-average pricing for inventory. In 2022, in accordance with other companies in its industry, Zehms changed its inventory pricing to FIFO. The pretax income data is reported below. Year Weighted-Average FIFO 2020 $370,000 $395,000 2021 390,000 420,000 2022 410.000 460,000 Instructions a. What is Zehms's net income in 2022? Assume a 35%6 tax rate in all vears. b. Compute the cumulative effect of the change in accounting principle from weighted-average to FIFO inventory pricing. c. Show comparative income statements for Zehms Company, beginning with income before income tax, as presented on the 2022 income statement.
E4.14 (LO 3, 4) (Change in Accounting Principle) Zehms Company began operations in 2020 and adopted weighted-average pricing for inventory. In 2022, in accordance with other companies in its industry, Zehms changed its inventory pricing to FIFO. The pretax income data is reported below. Year Weighted-Average FIFO 2020 $370,000 $395,000 2021 390,000 420,000 2022 410.000 460,000 Instructions a. What is Zehms's net income in 2022? Assume a 35%6 tax rate in all vears. b. Compute the cumulative effect of the change in accounting principle from weighted-average to FIFO inventory pricing. c. Show comparative income statements for Zehms Company, beginning with income before income tax, as presented on the 2022 income statement.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
Section: Chapter Questions
Problem 25E
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