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Question - During 2017, Orca Corp. decided to change from the FIFO method of inventory valuation to the weighted-average method.
Inventory balances under each method were as follows:
FIFO Weighted-average
January 1, 2017 $71,000 $77,000
December 31, 2017 $79,000 $83,000
Orca's income tax rate is 30%.
In its 2017 financial statements, what amount should Orca report as the cumulative effect of this accounting change?
$2,800
$4,000
$4,200
$6,000
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