How much higher or lower would cost of goods sold be

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Goddard Company has used the FIFO method of inventory valuation since it began operations in 2018. Goddard decided to change to the average cost method for determining inventory costs at the beginning of 2021.

The following schedule shows year-end inventory balances under the FIFO and average cost methods:

Year          FIFO             Average Cost

2018     $45,100            $54,200

2019     78,300             71,100

2020       83,400            78,300

Problem 1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method.

Problem 2. How much higher or lower would cost of goods sold be in the 2020 revised income statement?

Reference no: EM132907952

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