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Solutions to Acct Changes & Restatements Practice Problems

Solutions to Acct Changes & Restatements Practice Problems

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Accounting Changes and Restatements EXERCISE 22-2 (10–15 minutes) (a) Inventory .................................................................... 11,000* Retained Earnings ............................................. 11,000 *($19,000 + $21,000 + $25,000) – ($16,000 + $18,000 + $20,000) (b) Net Income (FIFO) 2009 $19,000 2010 21,000 2011 25,000 (c) Inventory ................................................................... 22,000* Retained Earnings ............................................ 22,000 *($19,000 + $21,000 + $25,000) – ($12,000 + $14,000 + $17,000) EXERCISE 22-4 (25–30 minutes) (a) Retained earnings, January 1, as reported ................ $160,000 2008 Cumulative effect of change in accounting principle to average cost .......................................... (13,000 Retained earnings, January 1, as adjusted ................ $147,000 )* *[$8,000 (2006) + $5,000 (2007)] (b) Retained earnings, January 1, as reported ................ $590,000 2011 Cumulative effect of change in accounting principle to average cost .......................................... (20,000 Retained earnings, January 1, as adjusted ................ $570,000 )* *[$8,000 (2006) + $5,000 (2007) + $10,000 (2008) – $10,000 (2009) + $7,000 (2010)]
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(c) Retained earnings, January 1, as reported ................ $780,000 2012 Cumulative effect of change in accounting principle to average cost .......................................... (15,000 Retained earnings, January 1, as adjusted ................ $765,000 )* *[$20,000 at 12/31/2010 – $5,000 (2011)] 2009 2010 (d) Net Income .............................. $130,000 $293,000 $310,000 2011 EXERCISE 22-6 (30–35 minutes) (a) Depreciation to date on equipment 2007 (5/15 X $450,000) $150,000 Sum-of-the-years’-digits depreciation 2008 (4/15 X $450,000) 120,000 2009 (3/15 X $450,000) $360,000 90,000 Cost of equipment ................................ $465,000 Depreciation to date .............................
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