E 9-24 Change in inventory costing methods. Goddard Company has used the FIFO method of inventory valuation since it began operations in
ANSWER KEY E 9-24 Change in inventory costing methods
Goddard Company has used the FIFO method of inventory valuation since it began operations in 2008. Goddard decided to change to the average cost method for determining inventory costs at the beginning of 2011. The following schedule shows year-end inventory balances under the FIFO and average cost methods:
Year FIFO Average Cost
2008 $45,000 $54,000
2009 78,000 71,000
2010 83,000 78,000
Required:
1. Ignoring income taxes, prepare the 2011 journal entry to adjust the accounts to reflect the average cost method.
2. How much higher or lower would cost of goods sold be in the 2010 revised income statement?
