Inventory is also regarded as the stock of the firm. It is produced by the company with a purchase to sale. The end product of business operations is referred to inventory. If W-M uses ‘lower of cost or market’ method and markdown the inventory value at market value.

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Waterway Company began operations on January 1, 2018, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2021. The following information is available for the years 2018–2020. Net Income Computed Using Average-Cost Method FIFO Method LIFO Method 2018 $16,110 $18,880 $12,030 2019 17,960 20,820 13,910 2020 20,000 24,850 17,140 (a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Enter an account title Enter a debit amount Enter a credit amount Enter an account title Enter a debit amount Enter a credit amount (b) Determine net income to be…

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Chapter 6, Problem 80.5C

To determine

Introduction:

Inventory is also regarded as the stock of the firm. It is produced by the company with a purchase to sale. The end product of business operations is referred to inventory.

If W-M uses ‘lower of cost or market’ method and markdown the inventory value at market value.

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