VL ACCOUNTING CHANGES AND ERRORS

School: University Of Central Missouri - Course: ACCT 1 - Subject: Accounting

During2022 (itsfirstof operations)and2023, Fieriroodsusedthe jnventorycostingmethodforbothfinancialreportingand tax purposes.Atthebeginning of2024.Fieri decidedtochange totheoverage•nethodforboth financialreportingandtaxpurposes. Income componentsbet-ore income taxfor2022.2023. and2024osfollows: (Sinmillions) Revenues Cost ofgoodssold(HFO) Costof goodssold(average) Operating expenses 2022(38)(52)(242) 2023 2024 390 s420 (40) (46) (56)(62) (250) (254) DividendsofS20million werepaideach year.FierÜsfiscalyear ends December31. Required: l. Preparethejournal entryatthebeginning of2024torecord thechangein accountingprinciple.(Ignoreincome taxes.) COGS 2. Preparethe2024-2023 comparativeincome statements. 902 L (QB-rseAS eoCD ILA opp\d 390 eoat> 33k eff.4 2023 390 C2Qü-D

I-Orfinancialreporting.KutnnsPoultryVarmshasusedlethodofdepreciation forconveyorequipmentacqujrcd thebeginningof'2021ror*2.560.000.Itsusefiilwasestltnatedbesixyearswithavalue.Atthebcgjnnjngof2024. Kumasdecidestochangetothestraight-Imemethod.TheefléctoCthischangeondepreciation[Oreachyearisasf0110ws: (Sinthousnndq) Year202120222023Required: Straight-Line 400400$1,200DecliningOnlnnee Difference 853$453 569 169 379 (21) $1.801 $601 l.WillKumasapply thestraight-linemethodretrospectivelyorapplythestraight-linemethodprospectively'? 2. Prepareany2024journalentry relatedtothechange. 2023 no *ova Age 2-0•-3 boo p_00 000 000

Dunng 2024. I-ipeandVipe Corpornuon discovered thatitsending inventoriesreported onltq[inanciol qtatcmentswerehr,'the tölloxxnng amounts: tapeandLipe usesthe Required: understatedby $120,000 overstatedby 150.000 systemand od. l.Determine theeffect ofthese errorson retainedearnings atJanuaryI. beforeanyadjustments. (Ignoreincometaxes.) 2.Prepare ajournal entryto correctthe errorin2024. 3.Will Lipeand Lipeaccount fortheerror(a) retrospectivelyor (b)prospectively'? BOY C ocns COCO u 0-0000) 000 9-0—0 000 I SO 000 t so 000 t Loooo) 000 000 (too 000) 900000 a.bumz @100,000 (goo oooD 000 2-OQ_Q 0.0 cog ISD000 000