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FromTheMoon [43]
3 years ago
5

On December 31, 2021, Caria vista inc. appropriately changed its inventory valuation method to FIFO cost from weighted average c

ost for financial statement and income tax purposes. The change will result in a $38,500 increase in the beginning inventory at January 1, 2021. Assume a 20% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is:_______
Business
2 answers:
Fed [463]3 years ago
5 0

Answer: $30,800

Explanation:

From the question, we are informed that On December 31, 2021, Caria Vista Incorporation appropriately changed its inventory valuation method to FIFO cost from the weighted average cost for financial statement and income tax purposes

Due to this, there was an increase in the beginning inventory by $38,500.

With an income tax rate of 20%, remaining amount on the net income would be carried to the retained earnings. The income tax rate on the increase will be:

= 20% × $38,500

= 20/100 × $38,500

= 0.2 × $38,500

= $7,700

Therefore, the balance of the net income which will be carried to the retained earnings will be:

= $38,500 - $7,700

= $30,800

Therefore, there will be an increase of $30,800 in retained earnings balance.

lisov135 [29]3 years ago
3 0

Answer: Increases by $30,800

Explanation:

If the inventory increased by $38,500 in January then that means that the Net Income for the previous period has increased because the Cost of Goods sold for the previous period will be less.

Since the Income for the year 2020 has increased by $38,500, the tax rate needs to be applied to it to see how much goes to retained earnings.

= 38,500 ( 1 - tax rate)

= 38,500 * ( 1 - 20%)

= $30,800

The beginning Retained Earnings balance Increases by $30,800

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PSYCHO15rus [73]

Answer:

The correct word for the blank space is: market cannibalization.

Explanation:

Market cannibalization refers to the loss of revenues as a result of the introduction of a new product by the same company. The initial purpose of the firm is to spread its market share but the product introduced is so similar or covers the same need than the previous that it ends up replacing it instead of acquiring more consumers.  

Market cannibalization also takes place when franchises of the same firm open stores too close to each other than one of them ends up capturing all consumers which replace the first store operating in the area.

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3 years ago
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Hope this Helps!

5 0
2 years ago
Debt Management Ratios Tiggie’s Dog Toys, Inc. reported a debt-to-equity ratio of 1.75 times at the end of 2015. If the firm’s t
mezya [45]

Answer:

Equity Tiggie’s has on its balance sheet: $14,285,714 (round up $14,29 million)

Explanation:

The debt-to-equity (D/E) ratio compares a company’s total debt to its total equity and can be used to evaluate how much leverage a company is using.

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6 0
3 years ago
why do natural and geographical monopolies arise, and why are they often good for the economy and for consumers
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For regular tax purposes, with regard to the itemized deduction for qualified residence interest, home equity indebtedness incur
mojhsa [17]

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The reasonable market value of the home shall not be greater than that of the purchase loan or the lesser amount of $100,000.  

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