Exercise 4-14 Pronghorn Company began operations in 2015 and for simplicity reas

Question

Exercise 4-14 Pronghorn Company began operations in 2015 and for simplicity reasons, adopted weighted-average pricing for inventory. In 2017, in accordance with other companies in its industry, Pronghorn changed its inventory pricing to FIFO. The pretax income data is reported below. Year Weighted-Average 2015 2016 2017 $371,800 398,000 411,900 FIFO $415,300 421,100 473,200 Your answer is incorrect. Try again what is Pronghorn's net income in 2017? Assume a 35% tax rate in all years. bosom Net Income LINK TO TEXT Your answer is incorrect. Try again. Compute the cumulative effect of the change in accounting principle from weighted-average to FIFO inventory pricing. Net effect 127,900.00

Explanation / Answer

(a) Net income before Tax 473200

Less: Income Tax 165620

Net Income 307580

[Assume effect of inventory has been already adjusted in income of 473200]

(b) Effect of change from weighted to FIFO

2015 415300 - 371800 = 43500

2016 421100 - 398000 = 23100

Net Change 66600

(c) 2015

Income before tax 415300

Less Tax 145355

Net Income 269945   

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