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Mumz [18]
3 years ago
14

Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the beginning

of 2018. The inventory as reported at the end of 2017 using LIFO would have been $60,000 higher using FIFO. Retained earnings at the end of 2017 was reported as $780,000 (reflecting the LIFO method). The tax rate is 40%. Required: 1. Calculate the balance in retained earnings at the time of the change (beginning of 2018) as it would have been reported if FIFO had been used in prior years. 2. Prepare the journal entry at the beginning of 2018 to record the change in accounting principle.
Business
1 answer:
otez555 [7]3 years ago
4 0

Answer:

Explanation:

1. The computation of the balance in retained earnings is shown below:

= Beginning retained earning balance + adjusted net income

where,

Beginning retained earning balance is $780,000

And, the adjusted net income is = Inventory × ( 1 - tax rate)

= $60,000 × (1 - 40%)

= $36,000

Now put these values to the above formula  

So, the value would equal to

= $780,000 + $36,000

= $816,000

2. The journal entry is shown below:

Inventory A/c Dr $60,000

   To Retained earning A/c $36,000

   To Tax payable A/c          $24,000

(Being inventory is adjusted and the remaining balance is credited to tax payable account)

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Thornton Industries began construction of a warehouse on July 1, 2018. The project was completed on March 31, 2019. No new loans
Nina [5.8K]

Answer:

interest capitalized during 2018 = $29,000

interest capitalized during 2019 = $14,000

Explanation:

current outstanding liabilities:

$6,000,000, 8% note

$9,000,000, 3% bonds

construction related expenditures:

July 1, 2018 $580,000

September 30, 2018 $870,000

November 30, 2018 $870,000

January 30, 2019 $810,000

interest capitalized for 2018:

July 1, 2018 $580,000 x 6/12 = $290,000

September 30, 2018 $870,000 x 3/12 = $217,500

November 30, 2018 $870,000 x 1/12 = $72,500

total weighted accumulated expenditures = $580,000

weighted interest rate:

$6/$15 x 8% = 3.2%

$9/$15 x 3% = 1.8%

total weighted interest = 5%

interest capitalized during 2018 = $580,000 x 5% = $29,000

interest capitalized for 2018:

January 1, 2019 $580,000 x 3/12 = $145,000

January 30, 2019 $810,000 x 2/12 = $135,000

total weighted accumulated expenditures = $280,000

interest capitalized during 2019 = $280,000 x 5% = $14,000

6 0
2 years ago
RAWRRRRRRRRR Whahahaha​
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Explanation:

wow

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3 0
2 years ago
When diseconomies of scale occur, Multiple Choice marginal cost intersects average total cost. the long-run average total cost c
Darya [45]

Answer:

the long-run average total cost curve rises

Explanation

Diseconomies of scale is a situation that comes up due to the growth of a business which leads to increase in cost per unit. It is the cost disadvantage a business accrue as a result of increase in output leading to increase in cost per unit in the production of goods and services. When diseconomies of scale occur, as output rises unit cost falls.

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2 years ago
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Is money the root of all evil?
SCORPION-xisa [38]

Answer:

No

Explanation:

the lo.ve of mone.y is a root of all kinds of e.v.il” or simply “for the love of money is the root of all e.vil.” Not m.oney itself, but the love of money. That's a key dis.tin.ction. Money itself is neither good nor e.vil.

hope it helps

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5 0
2 years ago
Read 2 more answers
Income statement data for Huffman Pharmaceuticals are provided below. Income Statements 12/31/201712/31/2016 Sales Revenue$598,0
koban [17]

Answer:

Huffman Pharmaceuticals

The percentage that should be assigned to Gross Profit, using trend analysis, is:

= 42%.

Explanation:

a) Data and Calculations:

Income Statements           12/31/2017         12/31/2016

Sales Revenue                  $598,000          $724,000

Cost of Goods Sold             337,000            427,000

Gross Profit                          261,000            297,000

Operating Expenses            137,000             146,000

Operating Income               124,000              151,000

Other Income (Expense)      60,000              23,000

Income before Tax              184,000             174,000

Income Tax Expense             71,000              76,000

Net Income                         $113,000           $98,000

Income Statements           12/31/2017         12/31/2016

Sales Revenue                  $598,000          $724,000

Cost of Goods Sold             337,000            427,000

Gross Profit                          261,000            297,000

Ratio of Gross profit to

 Sales Revenue

2017 = $261,000/$598,000 * 100 = 43.65% =  44%

2016 = $297,000/$724,000 * 100 = 41%

Average Gross profit ratio for the two years = 42.5% (44 + 41)/2.

b) Huffman's trend analysis is the use of its past financial performance indices to predict its future financial performances.  Past performances are expressed in percentages, forming the basis for predicting and comparing future performances of an entity.

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2 years ago
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