14. 5.00 points value: Macintosh Inc. changed from LIFO to the FIFO inventory co

Question

14. 5.00 points value: Macintosh Inc. changed from LIFO to the FIFO inventory costing method on January 1, 2016. Inventory values at the end of each year since the inception of the company are as follows: 2014 01 FIFO LIFO $201,000 S180,500 402,000 361,000 Ignoring income tax considerations, prepare the entry to report this accounting change. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the accounting change. Note: Enter debits before credits. Date General Journal Debit Credit January 01, 2016 Record entry Clear entry View general journal

Explanation / Answer

Journal entry: Jan1 2016 Inventory Account Dr. 41000       Retained earnings Account 41000 Note: The Inventory of the latest year shall be adjusted for valuation only as the previous year's adjustment will have Nil effect. Note: As per FIFO, there has been increased in the valuation of Inventory, which resulted in an increase in prior profits. These profits need to be adjusted in Retained earnings.

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