In-Lab 9 Accounting Changes & Errors with solution

In-Lab 9 Accounting Changes & Errors with solution...

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ACCT 401L Lab Assignment #9 Accounting Changes/Errors Name____________________ Date 3/25/11 Problem 1: Purple Company began operations on January 1, 2008, and uses the average cost method of pricing inventory. Management is contemplating a change in inventory methods for 2011. The following information is available for the years 2008-2010. Net income computed using Average cost method FIFO method LIFO method 2008 $16,000 $19,000 $12,000 2009 18,000 21,000 14,000 2010 20,000 25,000 17,000 Required: (Ignore all tax effects) (a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2011. (b) Determine net income to be reported for 2008, 2009, and 2010, after giving effect to the change in accounting principle. (c) Assume Purple Company used LIFO method instead of the average cost method during the years 2008-2010. In 2011, Purple changed to the FIFO method. Prepare the journal entry necessary to record the change in principle. Solution to Problem 1
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In-Lab 9 Accounting Changes & Errors with solution...

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