Accounting change on beginning retained earnings

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Reference no: EM131213578

On December 31, 2015, Toys Inc. appropriately changed its inventory valuation method from weighted-average cost to FIFO method for financial statement and income tax purposes. The change will result in a $500,000 increase in the beginning inventory at January 1, 2015. Assume a 20% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is

$500,000.

$100,000.

$400,000

$450,000.

Reference no: EM131213578

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