E22-14B (Various Changes in Principle—Inventory Methods) Below is the net income of Jonesey Laboratories computed under the three inventory methods. FIFO Average-Cost LIFO 2012 $75,000 $50,000 $30,000 2013 55,000 50,000 38,000 2014 58,000 50,000 42,000 20

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E22-14B (Various Changes in Principle—Inventory Methods) Below is the net income of Jonesey Laboratories

computed under the three inventory methods.

                FIFO             Average-Cost         LIFO  

2012   $75,000             $50,000            $30,000

2013     55,000                50,000              38,000

2014     58,000               50,000               42,000

2015     60,000               50,000               40,000

Instructions

(Ignore tax considerations.)

(a) Assume that in 2015 Jonesey decided to change from the average-cost method to the FIFO method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2015 and show net income reported for 2013, 2014, and 2015.

(b) Assume that in 2015 Jonesey, which had been using the LIFO method since incorporation in 2012, changed to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change in 2015 and show net income reported for 2013, 2014, and 2015.

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