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Accounting: Exercise 22-3 - Taveras Co. decides at the beginning of 2014...

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Exercise 22-3;Taveras Co. decides at the beginning of 2014 to adopt the FIFO method of inventory valuation. Taveras had used the LIFO method for financial reporting since its inception on January 1, 2012, and had maintained records adequate to apply the FIFO method retrospectively. Taveras concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The table presents the effects of the change in accounting principle on inventory and cost of goods sold.;Inventory Determined by;Cost of Goods Sold Determined by;Date;LIFO Method;FIFO Method;LIFO Method;FIFO Method;January 1, 2012;$ 0;$ 0;$ 0;$ 0;December 31, 2012;102;84;783;801;December 31, 2013;202;242;1,004;946;December 31, 2014;330;404;1,136;1,102;Retained earnings reported under LIFO are as follows.;Retained Earnings Balance;December 31, 2012;$2,609;December 31, 2013;4,997;December 31, 2014;7,253;Other information;1.;For each year presented, sales are $4,394 and operating expenses are $1,002.;2.;Taveras provides two years of financial statements. Earnings per share information is not required.;Prepare income statements under LIFO for 2012, 2013, and 2014.;TAVERAS CO.;Income Statement;For the Year Ended December 31;LIFO;2012;2013;2014;$;$;$;$;$;$;Prepare income statements under FIFO for 2012, 2013, and 2014.;TAVERAS CO.;Income Statement;For the Year Ended December 31;FIFO;2012;2013;2014;$;$;$

 

Paper#75557 | Written in 18-Jul-2015

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