Acc421 Intermediate Accounting: E4-13 Zehms Company began operations in 2008 and adopted

Acc421 Intermediate Accounting

E4-13 (Change in Accounting Principle)
Zehms Company began operations in 2008 and adopted weighted-average pricing for inventory. In 2010, in accordance with other companies in its industry, Zehms changed its inventory pricing to FIFO. The pretax income data is reported below.
Year Weighted-Average FIFO
2008 370,000 395,000
2009 390,000 430,000
2010 410,000 450,000

a. What is Zehms's net income in 2010? Assume a 35% tax rate in all years. (Enter all amounts as positive amounts and subtract where necessary.)
b. Compute the cumulative effect of the change in accounting principle from weighted-average to FIFO inventory pricing. (Enter all amounts as positive amounts and subtract where necessary.)
c. Show comparative income statements for Zehms Company, beginning with income before income tax, as presented on the 2010 income statement. (Enter all amounts as positive amounts and subtract where necessary.)
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