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Rockwell Corporation uses a periodic inventory sys...

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Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1976. In 2011, the company decided to switch to the average cost method. Data for 2011 are as follows: Beginning inventory, FIFO (4,800 units @ $29) $ 139,200 Purchases: 4,800 units @ $35 $ 168,000 4,800 units @ $39 187,200 355,200 Cost of goods available for sale $ 494,400 Sales for 2011 (7,680 units @ $69) $ 529,920 Additional Information: a. The company's effective income tax rate is 40% for all years. b. If the company had used the average cost method prior to 2011, ending inventory for 2010 would have been $120,640. c. 6,720 units remained in inventory at the end of 2011. Required: (1) Prepare the 2011 journal entry to adjust the accounts to reflect the average cost method. (Omit the "$" sign in your response.) (2) What is the effect of the change in methods on 2011 net income? (Round your intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

 

Paper#9729 | Written in 18-Jul-2015

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