In 2018, Bevins Company decided to change from LIFO to FIFO due to better representation of the flow of inventory and costs. Bevins started the business in 2016. Bevin's tax rate is 35%. The following analysis was provided by management: $$\begin{array} { c r r r }
\text { Ending Inventory } & { \text { LIFO } } & { \text { FIFO } } & \text { Net Income } \
\hline 12 / 31 / 2016 & \$ 375,650 & \$ 405,900 & 975,000 \
12 / 31 / 2017 & \$ 360,450 & \$ 410,750 & 1,350,000 \
12 / 31 / 2018 & \$ 365,975 & \$ 445,775 & 1,389,500
\end{array}$$ Required:
1) Prepare the journal entry necessary to record the change.
2) What amount of net income would Bevins report in 2016, 2017, and 2018?

Question

In 2018, Bevins Company decided to change from LIFO to FIFO due to better representation of the flow of inventory and costs. Bevins started the business in 2016. Bevin's tax rate is 35%. The following analysis was provided by management: $$\begin{array} { c r r r } 
\text { Ending Inventory } &  { \text { LIFO } } & { \text { FIFO } } & \text { Net Income } \
\hline 12 / 31 / 2016 & \$ 375,650 & \$ 405,900 & 975,000 \
12 / 31 / 2017 & \$ 360,450 & \$ 410,750 & 1,350,000 \
12 / 31 / 2018 & \$ 365,975 & \$ 445,775 & 1,389,500
\end{array}$$ Required:
1) Prepare the journal entry necessary to record the change.
2) What amount of net income would Bevins report in 2016, 2017, and 2018?

Quizplus · Accepted Answer

The Answer of In 2018, Bevins Company decided to change from LIFO to FIFO due to better representation of the flow of inventory and costs. Bevins started the business in 2016. Bevin's tax rate is 35%. The following analysis was provided by management: $$\begin{array} { c r r r } 
\text { Ending Inventory } &  { \text { LIFO } } & { \text { FIFO } } & \text { Net Income } \
\hline 12 / 31 / 2016 & \$ 375,650 & \$ 405,900 & 975,000 \
12 / 31 / 2017 & \$ 360,450 & \$ 410,750 & 1,350,000 \
12 / 31 / 2018 & \$ 365,975 & \$ 445,775 & 1,389,500
\end{array}$$ Required:
1) Prepare the journal entry necessary to record the change.
2) What amount of net income would Bevins report in 2016, 2017, and 2018?

In 2018, Bevins Company Decided to Change from LIFO to FIFO