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Prepare the journal entry to report the accounting change

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Reference no: EM132506245

Mac Inc. changed from LIFO to the FIFO inventory method on January 1, 2020.

Cost of goods sold calculated using each of the two inventory methods are as follows:

                      FIFO                     LIFO

2018:           200,000         180,000

2019:            400,000          380,000

2020:            370,000            300,000

Required:

Question (a) Assuming a 40% tax rate, prepare the journal entry to report this accounting change.

Question (b) What is the net effect of this accounting change on shareholders' equity?

Reference no: EM132506245

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