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Chapter 22 Homework - C hapter 22 Accounting Changes and...

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Chapter 22: Accounting Changes and Error Analysis Tiffany Watt Homework April 11, 2011 AC 302 – 01 Exercises E22-4 a) 2004 Retained earnings, January 1, as reported $160,00 0 Add: Adjustment for the cumulative effect on prior years of applying retrospectively the new method of accounting for inventory (15,000) a Retained earnings, January 1, as adjusted $145,00 0 b) 2007 Retained earnings, January 1, as reported $590,00 0 Add: Adjustment for the cumulative effect on prior years of applying retrospectively the new method of accounting for inventory (25,000) b Retained earnings, January 1, as adjusted $565,00 0 c) 2008 Retained earnings, January 1, as reported $160,00 0 Add: Adjustment for the cumulative effect on prior years of applying retrospectively the new method of accounting for inventory (20,000) c Retained earnings, January 1, as adjusted $760,00 0 d) Net income for 2007 will be $310,000 under the new method. a Net Income Effect FIFO Avg. Cost Increase
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Chapter 22: Accounting Changes and Error Analysis Tiffany Watt Homework April 11, 2011 AC 302 – 01 (Decrease) 2002 $100,000 $90,000 (10,000) 2003 70,000 65,000 (5,000) (15,000) b Net Income Effect FIFO Avg. Cost
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