Below is the net income of Anita Ferreri Instrument Co.

, a private corporation, computed under the

three inventory methods using a periodic system.

FIFO Average Cost LIFO

2012 $26,000 $24,000 $20,000
2013 30,000 25,000 21,000
2014 28,000 27,000 24,000
2015 34,000 30,000 26,000

(Ignore tax considerations.)

(a) Assume that in 2015 Ferreri decided to change from the FIFO method to the average-cost method
of pricing inventories. Prepare the journal entry necessary for the change that took place during 2015,
and show net income reported for 2012, 2013, 2014, and 2015. (Credit account titles are
automatically indented when amount is entered. Do not indent manually. If no entry is
required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and

Debit Credit
Explanation

2015 2014 2013 2012

$ $ $ $
Net
income

(b) Assume that in 2015 Ferreri, which had been using the LIFO method since incorporation in 2012,
changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the
change in 2015 and show net income reported for 2012, 2013, 2014, and 2015. (Credit account
titles are automatically indented when amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and

Debit Credit
Explanation

2015 2014 2013 2012

$ $ $
Net
$
income