Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2013. Baker has an effective income tax rate of 30 percent 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 2013, how much is reported as net income for the first quarter of 2013?
A) $492,000.
B) $494,800.
C) $500,000.
D) $505,200.
E) $527,950.

Question

Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2013. Baker has an effective income tax rate of 30 percent 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 2013, how much is reported as net income for the first quarter of 2013?
A) $492,000. 
B) $494,800. 
C) $500,000. 
D) $505,200. 
E) $527,950.

Quizplus · Accepted Answer

1^st Qtr 2013 Income $500,000 + Accounting Change Effect (net of tax) $5,200 = $505,200 1^st Qtr 2013 Net Income

Baker Corporation Changed from the LIFO Method to the FIFO