Determine net income to be reported

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Problem -

Oriole Company began operations on January 1, 2015, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2018. The following information is available for the years 2015-2017.


Net Income Computed Using


Average-Cost Method

FIFO Method

LIFO Method

2015

$16,060

$18,980

$12,010

2016

18,040

20,970

14,050

2017

20,180

25,130

17,000

(a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2018.

(b) Determine net income to be reported for 2015, 2016, and 2017, after giving effect to the change in accounting principle.

 

(c) Assume Oriole Company used the LIFO method instead of the average cost method during the years 2015-2017. In 2018, Oriole changed to the FIFO method. Prepare the journal entry necessary to record the change in principle.

Reference no: EM131578229

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