(Various Changes in Principle-Inventory Methods) Below is the net income of Jonesey Laboratories
computed under the three inventory methods.
FIFO Average-Cost LIFO
2012 $75,000 $50,000 $30,000
2013 55,000 50,000 38,000
2014 58,000 50,000 42,000
2015 60,000 50,000 40,000
Instructions
(Ignore tax considerations.)
(a) Assume that in 2015 Jonesey decided to change from the average-cost method to the FIFO method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2015 and show net income reported for 2013, 2014, and 2015.
(b) Assume that in 2015 Jonesey, which had been using the LIFO method since incorporation in 2012, changed to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change in 2015 and show net income reported for 2013, 2014, and 2015.