1. The financial statements using FIFO of Grady Companyfor 2016 and 2017 appear

Question

1. The financial statements using FIFO of Grady Companyfor 2016 and 2017 appear below: Dec 31, 2017 Dec 31,2016 Cash Receivables Inventories (FIFO) Other Assets 510,000 12,000 21,000 $15,000 10,000 18,000 $63,000 573,000 $30,000 573,000 S.10.000 Capital Stock Retained Earnings43,000 $30,000 33.000 $63,000 5 10,000 S.33.000 $33,000 Income Retained Earnings 1/1 $ 33,000 Dividends Retained Earnings 12/315 43,000 10,000) Grady changed to LIFO at the beginning of 2017. December 31 inventories at LIFO were $14,000for 2016 and $20,000 for 2017, The beginning inventory of 2016 waszero. A. Recast the above Income and Retained Earnings statement for 2017 under LIFO, assuming that 2017 will be shown alone and without any comparison to 2016. B. Journalize the prior period correction at January 1, 2017

Explanation / Answer

Requirement 1

Requiremet 2

Income Particulars 2017 Income $10,000 Change in opening stock $4,000 Change in Closing stock -$1,000 Net Income $13,000 Retained earning Particulars 2017 retained earning 1/1/17 $33,000 Dividend $0 income for the year $13,000 retained earning 31/21/17 $46,000

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