During 2020, Bramble Company changed from FIFO to weighted-average inventory pricing. Pretax income in 2019 and 2018 (Bramble’s
first year of operations) under FIFO was $175,550 and $183,900, respectively. Pretax income using weighted-average pricing in the prior years would have been $147,000 in 2019 and $175,200 in 2018. In 2020, Bramble reported pretax income (using weighted-average pricing) of $201,100. Show comparative income statements for Bramble, beginning with "Income before income tax," as presented on the 2020 income statement. (The tax rate in all years is 30%.)
1 answer:
Answer:
Explanation:
For showing the comparative income statement, first we have to do the calculations which are shown below:
For 2020 = Pretax income using weightage average pricing - tax rate @30%
= $201,100 - $60,330
= $140,770
For 2019 = Pretax income using weightage average pricing- tax rate @30%
= $147,000 - $44,100
= $102,900
For 2018 = Pretax income using weightage average pricing - tax rate @30%
= $175,200 - $52,560
= $122,640
We ignored the computation through FIFO method
The computation of the comparative income is shown in spreadsheet. Kindly find the attachment below:
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