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ACC - Garner Company

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Question;Garner Company began operations on January 1;2010, and uses the average cost method of pricing inventory. Management is;contemplating a change in inventory methods for 2013. The following information;is available for the years 2010?2012.;Net;Income Computed Using;Average;Cost Method;FIFO;Method;LIFO;Method;2010;$15,000;$20,000;$12,000;2011;18,000;24,000;14,000;2012;20,000;27,000;17,000;On January 1, 2012, Garner issued 10-year;$200,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 30;shares of Garner common stock. The company has had 10,000 common shares;outstanding throughout its life. None of the bonds have been exercised as of;the end of 2013. (Ignore tax effects.);1. Using the spreadsheet Journal Entries;prepare the journal entry necessary to record a change from the average cost;method to the FIFO method in 2013.;2. Assume Garner Company used the LIFO method;instead of the average cost method during the years 2010?2012. In 2013, Garner;changed to the FIFO method. Using the spreadsheet Journal Entries;prepare the journal entry necessary to record the change in accounting;principle.;3. Assuming Garner had the accounting change;described in (2), Garner?s income in 2013 was $30,000. Compute basic and;diluted earnings per share for Garner Company for 2013. Show how income and EPS;will be reported for 2013 and 2012.

 

Paper#41196 | Written in 18-Jul-2015

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