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Hi,
Can someone please help this question, accourding to Yaeger CPA review, the correct is C.
But why answer B is not correct??
Thank you in advance!
On January 1, 20X9, Jay Company changed to the weighted average cost method from the first-in, first-out (FIFO) cost method for inventory cost flow purposes. Jay can justify the change and it is practical to determine the period-specific effects of an accounting change, which was made for both financial statement and income tax reporting purposes. The change will result in a $120,000 decrease in the beginning inventory at January 1, 20X9. Ignoring income taxes, the cumulative effect of changing to the weighted-average method from the FIFO method must be reported by Jay in the 20X9
A. Income statement at December 31, 20X9 should be $120,000 less.
B. Retained earnings statement as a $120,000 debit adjustment to the beginning balance.
C. Income statement at December 31, 20X9 should be $120,000 more.
D. Retained earnings statement as a $120,000 credit adjustment to the beginning balance.
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