On January 1, 2018, Toups Inc. changed from FIFO to LIFO for income tax and externalreporting purposes. At that date, the beginning FIFO inventory was $75,000. See the followinginformation from Toups's records.Ending Inventory at FIFO$ 75,00088,000100,000YearIndex201820191.001.1020201.152021202275,00088,0001.201.253e. Write the necessary adjusting entries to adjust the LIFO Reserve for each year.

The LIFO reserve can be defined as the amount by which inventory costs under FIFO exceeds inventory…

On January 1, 2018, Toups Inc. changed from FIFO to LIFO for income tax and external reporting purposes. At that date, the beginning FIFO inventory was $75,000. See the following information from Toups's records.

On January 1, 2018, Toups Inc. changed from FIFO to LIFO for income tax and external reporting purposes. At that date, the beginning FIFO inventory was $75,000. See the following information from Toups's records.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 6MCQ: Refer to the information for Morgan Inc. above. If Morgan uses a perpetual inventory system, what is...

See similar textbooks

Related questions

Q: Assuming FIFO cost cash flow method is used, how much is the ending inventory and cost of sales, res...

A: May be there is some problem with options because Ending inventory 130,300 Cost of sales ...

Q: convert them into Experience Plus theatres. These two theatres are located in buildings that ETI

A: Assistant Secretary for Planning and Evaluation (ASPE) refers to the main advisor of the Secretary ...

Q: In June of the current year, Department 2 (last department) received 80,000 un the end of the month,...

A: Equivalent Units:

Q: Q20. An investor has £200,000 in cash which they are looking to either use to buy a house for rentin...

A: The risk profile for both investments as either purchasing house or investing in company is same whi...

Q: Abednego Company purchased equity investments held for trading on January 1, 2020. Market – (12/31/2...

A: In case of equity investments held for trading , they should be reported at market value as at year ...

Q: Part A A software company is considering launching a new product in the market. To record consumer b...

A: Comment- Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the quest...

Q: Sparkling Beverages makes one of its products by way of three separate stages. Details of production...

Q: He buys them at R10 each and sells them for R25. e Some tourists bought 10 units from Peter. a Purch...

A: "We’ll answer the first question since the exact one wasn’t specified. Please submit a new question ...

Q: Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respective...

A: (A.) Financial advantage (disadvantage) = $360,000 Alphas Per Unit $ Sales 112 Less: Va...

Q: French Confection, Inc., allocates overhead using direct labor hours as the allocation activity. The...

A: Predetermined overhead rate = Estimated manufacturing overhead/Estimated direct labor hours Overhead...

Q: The term to describe taxable income before the qualified business income deduction and less dividend...

A: Lets understand the basics. Qualified business income is an income on which qualified business incom...

Q: choose the correct answer: Equity security acquired for trading should be measured at reporting dat...

A: Equity Securities Held for Trading Equity securities which are held for trading purpose which can be...

Q: Wedding R Us sells wedding dresses. The cost of each dress is comprised of the following: Selling pr...

A: Since you have posted question with multiple sub-parts , we will do the first three sub-parts for yo...

Q: If you are the Financial Manager of Zenith Construction Company, which of the three alternatives has...

A: Solution Concept There are three different alternative course of action given The alternative with l...

Q: Compare and contrast the net income margins of both Company A and B. Do you think the company with t...

A: Net income margin = net income/sales

Q: 31. Cost of goods sold for the period was O P235,000 O P160,000 P200,000 O P170,000

A: Cost of Goods Sold = Beginning Inventory + Cost of Purchases - Ending Inventory Cost of Purchases = ...

Q: Condensed financial data of Novak Company for 2020 and 2019 are presented below. NOVAK COMPANY COMP...

A: The cash flow statement (CFS) is a financial statement that summarizes the flow of cash and cash equ...

Q: 2020 2019 Cash $1,800 $1,130 Receivables 1,770 1,320 Inventory 1,560 ...

A: Statement of cash flow is the cash book in detailed version which shows the receipts and payments of...

Q: n the coming three years, you will need Php 200,000. What amount will you deposit in a bank at prese...

A: solution Given for first question Future value needed 200000 Present value ? Interes...

Q: An accountant of a company is trying to calculate what amount needs to be invested today to produc a...

A: The amount needs to ne invested today to produce some amount in future is known as Present Value.

Q: A distraught employee, Fang W. Arson, put a torch to manufacturing plant on a blustery February 26 T...

A: The statement of cost of goods sold is calculated as difference between sales revenue and gross prof...

Q: Prior to adjustment at the end of the year, the balance in Trucks is $403,000 and the balance in Acc...

A: Depreciation accounting refers to the accounting under which the assets value is depreciated or allo...

Q: January 1,2020, Shirley Corporation leased a machinery from Joel Company on a five-year lease term a...

A: 1)leasing is the process by which a firm can obtain the use of fixed assets for which it makes a ser...

Q: 2. Apple Company purchases 80 percent of Mango. At the date of acquisition, Mango has revenue of P25...

A: The question is related to Consolidation. The details are given as under Parent Share = 80% Non Con...

Q: The following data were taken from the records of Winner Company for the month of October: Work in ...

A: Under average costing it is assumed that whole of opening inventory is completed during the period, ...

Q: !!!!!

A: Since you have posted question with multiple sub-parts , we will do the first three sub-parts for yo...

Q: Dove Company uses FIFO method of process costing. The company’s cost accountant has provided you wi...

A: Solution: Dove Company Finishing Department Computation of Equivalent unit (F...

Q: Identify the accounting concepts/policies adopted in the preparation of balance sheet of the company...

A: Introduction Accounting concepts and policies are specific principles, conventions, rules and practi...

Q: Georgia Products Inc. completed and transferred 193,000 particle board units of production from the ...

A: Equivalents units = Units completed and transferred + (Ending units x Completion ratio) Direct mate...

Q: n. Salary of construction supervisor (80% to building; 20% to parking lot and concrete walks) $50,00...

A: Here discuss about the details of cost which are associated with land, land improvements, building ...

Q: Teal Corporation sold 160 convertible, 10-year bonds at par for $160,000. Each bond pays 4% annual i...

A: Bond Accounting refers to the recording of bond related transactions i.e. issuance of bonds at par, ...

Q: ohnson Company adds materials, 50% at the start of the process and 50% at the end of the process in ...

A: Solution: Equivalent units of production (EUP) Units % material EUP-Materials % Conversion E...

Q: The purpose of a discount price for bonds is to: Select one: a. Increase profits b. Compensate the i...

A: solution Concept The bond is issued at discount when -the coupon rate is less than t...

Q: Nico Manufacturing Company applies process costing in the manufacture of its best-seller Manufacturi...

A: Total cost of units transferred to department 2 comprises of beginning inventory cost and cost of fr...

Q: PROBLEM: Financial Perspective Gloria Corporation presents the following information for year 2020 &...

A: The correct answer for the above question is given in the following steps for your reference.

Q: A bank reconciliation explains the differences between ____________. A. cash receipts and cash disbu...

A: Introduction: BRS: BRS stands for Bank Reconciliation statement. To reconcile the difference between...

Q: QUESTION 10 Buy the Pound Company allocates machine-related overhead using machine hours and personn...

A: Overhead refers to the indirect expenses that are associated with the manufacturing or the selling o...

Q: aily Custom Company manufactures plastic chairs in its Processing Department. Direct materials are i...

A: In process COSTING , product pass through two different process to reach the final output,. cost at ...

Q: On May 15, 2020, Aldean Company, a calendar year taxpayer, purchased and placed into service a nonre...

A: As per USA Income Tax Act i.e rules of depreciation by IRS , a comm...

Q: Sparkling Beverages makes one of its products by way of three separate stages. Details of production...

A: The term "process accounting" refers to a procedure in which raw materials are added to several proc...

Q: S18-2 Trend analysis Mariner Ltd reported the following revenues and profit amounts: (In millions) 2...

A: Trend analysis refers to horizontal analysis which includes comparison of items of financial stateme...

Q: Township should record the Land at:

A: Cost allocation refers to the process which is used by the company to allocate the cost of product o...

Q: What is the value of customer relations and customer service?

A: Customer relations is the relationship with customer and the focus of which is to build customer rel...

Q: On January 1, 2021, Sheridan, Inc. purchased a machine for $2180000 which will be depreciated $21800...

A: Solution Concept If in case due to temporary difference The income for tax reporting is less than th...

Q: Mr. Martínez is the owner of a company dedicated to the production of renewable energy. Nowadays, hi...

A: Martinez is in the production of renewable financing. The competition has increased and the resorts ...

Q: The Philippines debt as of today amounts to 12 trillion. This balloons with an interest rate of 0.16...

A: In order to calculate the monthly payment to be made by earning individuals, we are required to calc...

Q: Macrosoft Company reports net income of $73,000. The accounting records reveal depreciation expense ...

A: Cash flows from operating activities: It is a section of the Statement of cash flow that explains th...

Q: QUESTION 7 Boris' Car Loft, Inc., began operations on January 1. It manufactures 10,000 automobiles ...

A: Costs that are directly associated with production process are known as product costs.

Q: ABC Corporation plans to issue an 8%, 15-year, P5,000,000 face value bonds. It will incur P300,000 a...

A: Given details: Face value, FV = P5,000,000 Coupon rate = 8%, So interest per annum is P5,000,000 x 8...

Q: Daily Custom Company manufactures plastic chairs in its Processing Department. Direct materials are ...

A: Cost of ending inventory is the cost of that goods or stock which has remained in the warehouse of t...

Question

On January 1, 2018, Toups Inc. changed from FIFO to LIFO for income tax and external
reporting purposes. At that date, the beginning FIFO inventory was $75,000. See the following
information from Toups's records.
Ending Inventory at FIFO
$ 75,000
88,000
100,000
Year
Index
2018
2019
1.00
1.10
2020
1.15
2021
2022
75,000
88,000
1.20
1.25
3e. Write the necessary adjusting entries to adjust the LIFO Reserve for each year.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

LIFO Reserve:

VIEW

Working Note: Calculation of Allowance to Reduce FIFO Inventory to LIFO Basis.

VIEW

(3e). Provide the necessary adjusting entries to adjust the LIFO Reserve for each year.

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The following items were included in Venicio Corporations inventory account on December 31, 2019: What amount should Venicio report as inventory at December 31, 2019? a. 21,000 b. 20,400 c. 26,000 d. 35,000
Refer to the information provided in RE8-4. If Paul Corporations inventory at January 1, 2019, had a cost and net realizable value of 300,000, prepare the journal entry to record the reductions to NRV for Paul Corporation assuming that Paul uses a periodic inventory system and the allowance method. Paul Corporation uses FIFO and reports the following inventory information: Assuming Paul uses a perpetual inventory system and the direct method, prepare the journal entry to record the write-down of inventory.
Schmidt Company began operations on January 1, 2018, and used the LIFO inventory method for both financial reporting and income taxes. However, at the beginning of 2020, Schmidt decided to switch to the average cost inventory method for financial and income tax reporting. It had previously reported the following financial statement information for 2019: An analysis of the accounting records discloses the following cost of goods sold under the LIFO and average cost inventory methods: There are no indirect effects of the change in inventory method. Revenues for 2020 total 130,000; operating expenses for 2020 total 30,000. Schmidt is subject to a 21% income tax rate in all years; it pays all income taxes payable in the next quarter. Assume that any deferred tax liability was paid in the subsequent year. Schmidt had 10,000 shares of common stock outstanding during all years; it paid dividends of 1 per share in 2020. At the end of 2020, Schmidt had cash of 15,600, inventory of 34,000, other assets of 76,000, income taxes payable of 4,200, and accounts payable of 3,000. It desires to show financial statements for the current year and previous year in its 2020 annual report. Required: 1. Prepare the journal entry to reflect the change in method at the beginning of 2020. Show supporting calculations. 2. Prepare the 2020 financial statements. Notes to the financial statements are not necessary. Show supporting calculations.
Refer to the information provided in RE8-4. If Paul Corporations inventory at January 1, 2019, had a cost and net realizable value of 300,000, prepare the journal entry to record the reductions to NRV for Paul Corporation assuming that Paul uses a periodic inventory system and the direct method. Paul Corporation uses FIFO and reports the following inventory information: Assuming Paul uses a perpetual inventory system and the direct method, prepare the journal entry to record the write-down of inventory.
Koopman Company began operations on January 1, 2018, and uses they FIFO inventory method for financial reporting and the average cost inventory method for income taxes. At the beginning of 2020, Koopman decided to switch to the average cost inventory method for financial reporting. It had previously reported the following financial statement information for 2019: An analysis of the accounting records discloses the following cost of goods sold under the FIFO and average cost inventory methods: There are no indirect effects of the change in inventory method. Revenues for 2020 total 130,000; operating expenses for 2020 total 30,000. Koopman is subject to a 21% income tax rate in all years; it pays the income taxes payable of a current year in the first quarter of the next year. Koopman had 10,000 shares of common stock outstanding during all years; it paid dividends of 1 per share in 2020. At the end of 2020, Koopman had cash of 10,000, inventory of 24,000, other assets of 70,800, accounts payable of 4,500, and income taxes payable of 6,000. It desires to show financial statements for the current year and previous year in its 2020 annual report. Required: 1. Prepare the journal entry to reflect the change in methods at the beginning of 2020. Show supporting calculations. 2. Prepare the 2020 financial statements. Notes to the financial statements are not necessary. Show supporting calculations.
In 2020, Frost Company, which began operations in 2018, decided to change from LIFO to FIFO because management believed that FIFO belter represented the flow of their inventory. Management prepared the following analysis showing the effect of this change: Frost reported net income of 2,500,000, 2,400,000, and 2,100,000 in 2018, 2019, and 2020, respectively. The tax rate is 21%. Required: 1. Prepare the journal entry necessary to record the change. 2. What amount of net income would Frost report in 2018, 2019, and 2020? 3. If Frosts employees received a bonus of 10% of income before deducting the bonus and income taxes in 2018 and 2019, what would be the effect on net income for 2018, 2019, and 2020?
At the end of 2019, Manny Company recorded its ending inventory at 350,000 based on a physical count. During 2020, the company discovered that the correct inventory value at the end of 2019 should have been 400,000 because it made a counting error. Upon discovery of this error in 2020, what correcting journal entry will Manny make? Ignore income taxes.
Fava Company began operations in 2018 and used the LIFO inventory method for both financial reporting and income taxes. At the beginning of 2019, the anticipated cost trends in the industry had changed, so that it adopted the FIFO method for both financial reporting and income taxes. Fava reported revenues of 300,000 and 270,000 in 2019 and 2018, respectively. Fava reported expenses (excluding income tax expense) of 125,000 and 120,000 in 2019 and 2018, which included cost of goods sold of 55,000 and 45,000, respectively. An analysis indicates that the FIFO cost of goods sold would have been lower by 8,000 in 2018. The tax rate is 21%. Fava has a simple capital structure with 15,000 shares of common stock outstanding during 2018 and 2019. It paid no dividends in either year. Required: 1. Prepare the journal entry to reflect the change. 2. At the end of 2019, prepare the comparative income statements for 2019 and 2018. Notes to the financial statements are not necessary. 3. At the end of 2019, prepare the comparative retained earnings statements for 2019 and 2018.
The cost of the inventory on January 31, 2019, under the FIFO method is: a. 400 b. 2,700 c. 3,100 d. 3,200
Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.
Olson Company adopted the dollar-value LIFO method for inventory valuation at the beginning of 2015. The following information about the inventory at the end of each year is available from Olsons records: Required: 1. Calculate the dollar-value LIFO inventory at the end of each year. 2. Prepare the appropriate disclosures for the 2021 annual report if Olson uses current cost internally and LIFO for financial reporting.
Borys Companys periodic inventory at December 31, 2019, is understated by 10,000, but purchases are correct. Johnson correctly values its 2020 ending inventory. What is the effect of this error on Boryss 2019 and 2020 financial statements?