Reference no: EM131888381
Question: In 2017, Frost Company, which began operations in 2015, decided to change from LIFO to FIFO because management believed that FIFO better represented the flow of their inventory. Management prepared the following analysis showing the effect of this change:
| Ending Inventory | LIFO | FIFO | Cumulative Difference |
| 12/31/2015 |
$240,000 |
$273,000 |
$33,000 |
| 12/31/2016 |
245,000 |
301,000 |
56,000 |
| 12/31/2017 |
256,000 |
328,000 |
72,000 |
Frost reported net income of $2,500,000, $2,400,000, and $2,100,000 in 2015, 2016, and 2017, respectively. The tax rate is 30%.
Required: 1. Prepare the journal entry necessary to record the change.
2. What amount of net income would Frost report in 2015, 2016, and 2017?
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