The Opal Company was incorporated and began operations on January 1, 2014. Opal used the weighted-average method for costing inventories. Effective January 1, 2015, Opal changed to FIFO for costing inventories and can justify the change. Information related to 2014 and 2015 inventory cost and net income is presented below:
Opal's income tax rate is 30% for both 2014 and 2015.
Required:
Calculate the amount of the cumulative effect of the change on beginning retained earnings on January 1, 2015, that would appear on Opal's statement of retained earnings for the year ended December 31, 2015.

Question

The Opal Company was incorporated and began operations on January 1, 2014. Opal used the weighted-average method for costing inventories. Effective January 1, 2015, Opal changed to FIFO for costing inventories and can justify the change. Information related to 2014 and 2015 inventory cost and net income is presented below:  
Opal's income tax rate is 30% for both 2014 and 2015.
Required:
Calculate the amount of the cumulative effect of the change on beginning retained earnings on January 1, 2015, that would appear on Opal's statement of retained earnings for the year ended December 31, 2015.

Quizplus · Accepted Answer

The Answer of The Opal Company was incorporated and began operations on January 1, 2014. Opal used the weighted-average method for costing inventories. Effective January 1, 2015, Opal changed to FIFO for costing inventories and can justify the change. Information related to 2014 and 2015 inventory cost and net income is presented below:  
Opal's income tax rate is 30% for both 2014 and 2015.
Required:
Calculate the amount of the cumulative effect of the change on beginning retained earnings on January 1, 2015, that would appear on Opal's statement of retained earnings for the year ended December 31, 2015.

The Opal Company Was Incorporated and Began Operations on January