Chapter 22, Problem 2E

To determine

Accounting principle: Accounting principles are the standard set of rules and guidelines which every organization has to comply, with respect to the preparation of financial statements.

(a)

To record: Recording the change in methods from Average cost method to LIFO.

Given information:

	Net income computed using
	Average cost method	FIFO	LIFO
2015	15,000	19,000	12,000
2016	18,000	23,000	14,000
2017	20,000	25,000	17,000

To determine

(b)

To compute: To compute the net income for 2015–2017 after change in accounting principle.

To determine

(c)

To compute: To compute the net income for the year 2018 after change in accounting principle.