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Prepare the journal entry at january

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Question - The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost method to the FIFO cost method at the beginning of 2021. At December 31, 2020, inventories were $124,000 (average cost basis) and were $123,000 a year earlier. Cecil-Booker's accountants determined that the inventories would have totaled $163,000 at December 31, 2020, and $168,000 at December 31, 2019, if determined on a FIFO basis. A tax rate of 25% is in effect for all years.

One hundred thousand common shares were outstanding each year. Income from continuing operations was $440,000 in 2020 and $555,000 in 2021. There were no discontinued operations either year.

Required -

1. Prepare the journal entry at January 1, 2021, to record the change in accounting principle.

2. Prepare the 2021-2020 comparative income statements beginning with income from continuing operations [adjusted for any revisions]. Include per share amounts.

Reference no: EM133168570

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