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Rus_ich [418]
2 years ago
6

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

of 2009. The inventory as reported at the end of 2008 using LIFO would have been $60,000 higher using FIFO. Retained earnings had been reported at the end of 2008 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 2009) as it would have been reported if FIFO had been used in prior years.2. Prepare the journal entry at the beginning of 2009 to record the change in principle.
Business
1 answer:
barxatty [35]2 years ago
3 0

Answer:

A. $816,000

B. Dr Inventory $60,000

Cr Retained earning $36,000

Cr Tax payable $24,000

Explanation:

A. Calculation to determine the balance in retained earnings at the time of the change

Using this formula

Retained earnings = Beginning retained earning balance + Adjusted net income

Let plug in the formula

Retained earnings=$780,000+ $60,000 × (1 - 40%)

Retained earnings=$780,000+($60,000×60%)

Retained earnings=$780,00+ $36,000

Retained earnings= $816,000

Therefore the balance in retained earnings at the time of the change is $816,000

2. Preparation of the journal entry at the beginning of 2009 to record the change in principle.

Dr Inventory $60,000

Cr Retained earning $36,000

[$60,000 × (1 - 40%)]

Cr Tax payable $24,000

($60,000-$36,000)

(Being to record the change in principle)

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serg [7]

The item has total cost paid after sales tax is $100.7.

The total cost for an item is the selling price that is paid after the addition of tax. The tax is the percent amount paid on the item over the selling price.

<h3>Computation for the total cost of the item</h3>

The cost of the item, <em>c</em> = $95

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The amount of tax paid is given as:

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The amount of tax paid on the item is $5.7.

The total cost of the item is given as:

\rm Total \;cost=\textit c\;+\;tax\\\\Total\;cost=95\;+\;5.7\\\\Total\;cost=100.7

The total cost paid for the item after sales tax is $100.7.

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brainly.com/question/1362871

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2 years ago
You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash that you can use as a down payment on
jeyben [28]

Answer:

$63,852

Explanation:

The computation is shown below:

a) PV of payments is

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5 0
3 years ago
Which of the following is not true regarding Depreciation? Group of answer choices Depreciation allocates the cost of a fixed as
Mariulka [41]

Answer: Depreciation expense reflects the decrease in market value each year.

Explanation:

Depreciation is the decrease in the value of an asset due to the passage of time. Overtime, the value of machineries reduce as a result of usage. Depreciation is therefore the reduction in the value of assets. Depreciation is also the method used tin reallocating the cost of a tangible assets over its useful life span. Firms depreciate assets for accounting and tax purposes. The reduction in the value of an asset has am effect on the balance sheet of an entity.

The answer to the question is the second option. Depreciation does not have anything to do with the market value. Other options are correct except for the second option which states that depreciation expense reflects the decrease in market value each year.

8 0
3 years ago
Read 2 more answers
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Answer:

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7 0
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he director of capital budgeting for See-Saw Inc., manufacturers of playground equipment, is considering a plan to expand produc
kicyunya [14]

Answer and Explanation:

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