Exercise 22-14 Below is the net income of Anita Ferreri Instrument Co., a privat
ID: 2473186 • Letter: E
Question
Exercise 22-14
Below is the net income of Anita Ferreri Instrument Co., a private corporation, computed under the three inventory methods using a periodic system.
FIFO
Average Cost
LIFO
(Ignore tax considerations.)
(a) Assume that in 2015 Ferreri decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2015, and show net income reported for 2012, 2013, 2014, and 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
2015
2014
2013
2012
(b) Assume that in 2015 Ferreri, which had been using the LIFO method since incorporation in 2012, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2015 and show net income reported for 2012, 2013, 2014, and 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
2015
2014
2013
2012
Your answer is partially correct. Try again.Explanation / Answer
a. Journal Entry
Net Income Would be
b. Journal entry
Net income would be
Account Titles and Explanation Debit Credit Retained Earnings 9,319 Inventory 9319Related Questions
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