Goddard Company has used the FIFO method of inventory valuation since it began operations in 2015....

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Accounting

Goddard Company has used the FIFO method of inventory valuationsince it began operations in 2015. Goddard decided to change to theaverage cost method for determining inventory costs at thebeginning of 2018. The following schedule shows year-end inventorybalances under the FIFO and average cost methods:
Year FIFO Average Cost
2015 $ 47,000 $ 58,000
2016 84,000 73,000
2017 91,000 84,000

Required:
1. Ignoring income taxes, prepare the 2018 journalentry to adjust the accounts to reflect the average costmethod.
2. How much higher or lower would cost of goodssold be in the 2017 revised income statement?

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Ans Date Account Title Explanation Debit Credit 2018 Retained Earnings 7000 Inventory 7000 Entry to Record Adjustment to reflect Average cost Method Particulars Amount 2 Decrease in See Answer

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Year	FIFO		Average Cost
2015	$	47,000	$	58,000
2016		84,000		73,000
2017		91,000		84,000