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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Refer to RE22-2. Assume Heller Company had sales revenue of $510,000 in 2019 and $650,000 in 2020. Prepare Heller’s partial income statements (through gross profit) for 2019 and 2020.

RE22-2

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, Heller’s 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 year’s income (net of taxes) that Heller would report on its retained earnings statement for 2020.

To determine

Prepare partial income statements of Company H for the years 2019 and 2020.

Explanation

Income statement: The financial statement which reports revenues and expenses from business operations, and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Prepare partial income statements of Company H for the years 2019 and 2020.

Company H

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