Determine net income to be reported

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Question - Buffalo 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

$15,900

$19,100

$11,930

2016

17,980

21,080

14,010

2017

20,170

25,210

17,150

Required -

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

Reference no: EM132753467

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