Compute cumulative effect of change in accounting principle

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Reference no: EM131247934

Cullumber Company began operations in 2015 and for simplicity reasons, adopted weighted-average pricing for inventory. In 2017, in accordance with other companies in its industry, Cullumber changed its inventory pricing to FIFO. The pretax income data is reported below.

Year               Weighted-Average               FIFO

2015                    $379,700                      $401,700

2016                     407,400                        427,900

2017                     413,500                        469,200

A) What is Cullumber’s net income in 2017? Assume a 35% tax rate in all years.  

B) Compute the cumulative effect of the change in accounting principle from weighted-average to FIFO inventory pricing.

C) Show comparative income statements for Cullumber Company, beginning with income before income tax, as presented on the 2017 income statement.

                                                                2017                         2016                        2015

Income before income tax

Income tax

Net income

Reference no: EM131247934

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