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question exercise 22 14 below is the net income of anita ferreri instrument co a pri 4285200

Question

Exercise 22-14

Below is the net income of Anita Ferreri Instrument Co., a private corporation, computed under the three inventory methods using a periodic system.

FIFO

Average Cost

LIFO

(Ignore tax considerations.)

(a) Assume that in 2015 Ferreri decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2015, and show net income reported for 2012, 2013, 2014, and 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

2015

2014

2013

2012

(b) Assume that in 2015 Ferreri, which had been using the LIFO method since incorporation in 2012, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2015 and show net income reported for 2012, 2013, 2014, and 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

2015

2014

2013

2012

 

 

FIFO

 

Average Cost

 

LIFO

2012

 

$26,543

 

$22,217

 

$20,864

2013

 

30,445

 

24,303

 

20,452

2014

 

29,287

 

27,896

 

24,710

2015

 

34,516

 

30,558

 

26,714

 

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