De Lacey Co
Subject:AccountingPrice: Bought3
De Lacey Co. began operations on January 1, 2015, and uses the average cost
method of pricing inventory. Management is going to change to the FIFO method
for 2018. The following information is available for the years 2015-2018.
Net Income
Average Cost Method FIFO Method
2015 $135,000 $138,000
2016 142,000 147,000
2017 163,000 167,000
2018 172,000 177,000
Instructions (ignore all tax effects):
a. Prepare the journal entry necessary to record a change from the average cost
method to the FIFO method in 2018.
b. Determine net income to be reported for 2015, 2016, and 2017, after giving
effect to the change in accounting principle.
