Exercise 22-2 https:\'edugen.wilcyplus.com edugen/shared\'assignmenttest qprint.
ID: 2552118 • Letter: E
Question
Exercise 22-2 https:'edugen.wilcyplus.com edugen/shared'assignmenttest qprint.uni Exercise 22-2 Your answer is partially correct. Try again Sage Company began operations on January 1, 2015, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2018. The following information is available for the years 2015-2017 Net Income Computed Using FIFO Method $18,870 20,890 25,100 Average-Cost Method LIFO Method 2015 2016 2017 $16,150 17,860 19,850 $12,080 14,140 17,020 (a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2018. (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 nventor 21620 Retained Earnin 21620 (b) Determine net income to be reported for 2015, 2016, and 2017, after giving effect to the change in accounting principle. Net Income 2015 [1887 2016 $2089 2017 $2510 (c) Assume Sage Company used the LIFO method instead of the average cost method during the years 2015-2017. In 2018, Sage changed to the FIFO method. Prepare the journal entry necessary to record the change in principle. (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 nventor of 2 3/25/2018, 11:52 AMExplanation / Answer
Account titles and explanation
Debit
Credit
Inventory
$ 11,000
Retained Earnings
$ 11,000
= 64860 - 53860
b)
Net Income
2015
$ 18,870
2016
$ 20,890
2017
$ 25,100
c)
Account titles and explanation
Debit
Credit
Retained Earnings
$ 10,620
Inventory
$ 10,620
= 53860 - 43240
Net Income computed Using
Average Cost method
FIFO Method
LIFO Method
2015
$ 16,150
$ 18,870
$ 12,080
2016
$ 17,860
$ 20,890
$ 14,140
2017
$ 19,850
$ 25,100
$ 17,020
$ 53,860
$ 64,860
$ 43,240
a)
Account titles and explanation
Debit
Credit
Inventory
$ 11,000
Retained Earnings
$ 11,000
= 64860 - 53860
b)
Net Income
2015
$ 18,870
2016
$ 20,890
2017
$ 25,100
c)
Account titles and explanation
Debit
Credit
Retained Earnings
$ 10,620
Inventory
$ 10,620
= 53860 - 43240
Net Income computed Using
Average Cost method
FIFO Method
LIFO Method
2015
$ 16,150
$ 18,870
$ 12,080
2016
$ 17,860
$ 20,890
$ 14,140
2017
$ 19,850
$ 25,100
$ 17,020
$ 53,860
$ 64,860
$ 43,240
a)
Account titles and explanation
Debit
Credit
Inventory
$ 11,000
Retained Earnings
$ 11,000
= 64860 - 53860
b)
Net Income
2015
$ 18,870
2016
$ 20,890
2017
$ 25,100
c)
Account titles and explanation
Debit
Credit
Retained Earnings
$ 10,620
Inventory
$ 10,620
= 53860 - 43240
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