Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1979. In 2021, the company decided to switch to the average cost method. Data for 2021 are as follows: Beginning inventory, FIFO (4,300 units e $35) Purchases: $150,500 4,300 units e $41 4,300 unita e $45 $176,300 193,500 369, 800 Cost of goods available for sale $520,300 Sales for 2021 (5,000 units e $68) $340,000 Additional Information: a. The company's effective income tax rate is 25% for all years. b. If the company had used the average cost method prior to 2021, ending inventory for 2020 would have been $94,600. c. 7,900 units remained in inventory at the end of 2021. Required: 1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method. 2. What is the effect of the change in methods on 2021 net income? The effect of the change for the year 2021 is a in cost of goods sold resulting in a in income before taxes and a(n)

Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1979. In 2021, the company decided to switch to the average cost method. Data for 2021 are as follows: Beginning inventory, FIFO (4,300 units e $35) Purchases: $150,500 4,300 units e $41 4,300 unita e $45 $176,300 193,500 369, 800 Cost of goods available for sale $520,300 Sales for 2021 (5,000 units e $68) $340,000 Additional Information: a. The company's effective income tax rate is 25% for all years. b. If the company had used the average cost method prior to 2021, ending inventory for 2020 would have been $94,600. c. 7,900 units remained in inventory at the end of 2021. Required: 1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method. 2. What is the effect of the change in methods on 2021 net income? The effect of the change for the year 2021 is a in cost of goods sold resulting in a in income before taxes and a(n)

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 50E: Inventory Costing Methods Crandall Distributors uses a perpetual inventory system and has the...

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The moving average inventory cost flow assumption is applicable to which of the following inventory systems? Questions M7-6 and M7-7 are based on the following data: City Stationers Inc. had 200 calculators on hand on January 1, 2019, costing 18 each. Purchases and sales of calculators during the month of January were as follows: City uses a periodic inventory system. According to a physical count, 150 calculators were on hand at January 31, 2019.
Refer to the information for Morgan Inc. above. If Morgan uses a perpetual inventory system, what is the cost of ending inventory under FIFO at April 30? a. $32,500 b. $38,400 c. $63,600 d. $69,500
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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.
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At December 31, 2019, the following information was available from Crisford Companys books: Sales for the year totaled 110,600; markdowns amounted to 1,400. Under the approximate lower of average cost or market retail method, Crisfords inventory at December 31, 2019, was: a. 30,800 b. 28.000 c. 21,560 d. 19,600
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