Exercise 22-3 Date LIFO Method FIFO Method LIFO Method FIFO Method Retained Earn
ID: 2577852 • Letter: E
Question
Exercise 22-3
Date
LIFO Method
FIFO Method
LIFO Method
FIFO Method
Retained Earnings Balance
Prepare income statements under LIFO for 2015, 2016, and 2017.
Exercise 22-3
Sunland Co. decides at the beginning of 2017 to adopt the FIFO method of inventory valuation. Sunland had used the LIFO method for financial reporting since its inception on January 1, 2015, and had maintained records adequate to apply the FIFO method retrospectively. Sunland concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The following table presents the effects of the change in accounting principles on inventory and cost of goods sold.Inventory Determined by Cost of Goods Sold Determined by
Date
LIFO Method
FIFO Method
LIFO Method
FIFO Method
January 1, 2015 $ 0 $ 0 $ 0 $ 0 December 31, 2015 110 9 720 821 December 31, 2016 210 240 940 809 December 31, 2017 290 380 1,020 960Retained earnings reported under LIFO are as follows.
Retained Earnings Balance
December 31, 2015 $1,360 December 31, 2016 2,500 December 31, 2017 3,560Other information:
1. For each year presented, sales are $3,040 and operating expenses are $960. 2. Sunland provides two years of financial statements. Earnings per share information is not required.
Prepare income statements under LIFO for 2015, 2016, and 2017.
Explanation / Answer
Sunland Co Income Statement under LIFO For the year ended Dec-31 2015 2016 2017 Sales Revenues 3040 3040 3040 Cost of Goods Sold 720 940 1020 Operating Expenses 960 960 960 Net Income in $ 1360 1140 1060
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