Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2021. Baker has an effective income tax rate of 35% and 100,000 shares of common stock issued and outstanding. The following additional information is available: Assuming Baker makes the change in the first quarter of 2021 and that $400,000 net income is earned during the second quarter, how much is reported as net income for the second quarter of 2021?
A) $400,000.
B) $405,200.
C) $427,950.
D) $894,850.
E) $905,200.

Question

Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2021. Baker has an effective income tax rate of 35% and 100,000 shares of common stock issued and outstanding. The following additional information is available:  Assuming Baker makes the change in the first quarter of 2021 and that $400,000 net income is earned during the second quarter, how much is reported as net income for the second quarter of 2021?
A) $400,000. 
B) $405,200. 
C) $427,950. 
D) $894,850. 
E) $905,200.

Quizplus · Accepted Answer

The Answer of Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2021. Baker has an effective income tax rate of 35% and 100,000 shares of common stock issued and outstanding. The following additional information is available:  Assuming Baker makes the change in the first quarter of 2021 and that $400,000 net income is earned during the second quarter, how much is reported as net income for the second quarter of 2021?
A) $400,000. 
B) $405,200. 
C) $427,950. 
D) $894,850. 
E) $905,200.

Baker Corporation Changed from the LIFO Method to the FIFO