Prepare the journal entry necessary to record the change

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Question - Holder-Webb Company began operations on January 1, 2012, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2015. The following information is available for the years 2012-2014.


Net Income Computed Using


Average-Cost Method

FIFO Method

LIFO Method

2012

$15,966

$19,505

$11,200

2013

18,323

21,738

14,891

2014

19,950

24,525

16,374

(a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2015.

(b) Determine net income to be reported for 2012, 2013, and 2014, after giving effect to the change in accounting principle.

(c) Assume Holder-Webb Company used the LIFO method instead of the average cost method during the years 2012-2014. In 2015, Holder-Webb changed to the FIFO method. Prepare the journal entry necessary to record the change in principle.

Reference no: EM132104889

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