Johnston Controls Began Operations in 2018 Using FIFO Inventory Methods

question 23

Essay

Johnston Controls began operations in 2018 using FIFO inventory methods. On January 1, 2019, management decided they should have chosen to use LIFO, as it more accurately reflects income. The beginning 2019 inventory using FIFO was $100,000. Under the LIFO method the beginning inventory would have been $120,000.
Required: Prepare the journal entry to record the change in accounting principle and discuss the required disclosures.

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Definitions:

Standard Deviation

A measure of the dispersion or spread of a set of data points relative to their mean, showing how much variation exists.

Response Variable

The outcome variable that researchers aim to predict or explain through statistical models, observed in an experiment or study.

Standard Error

A statistical measure that describes the accuracy with which a sample mean estimates the population mean.

Regression Line

A line of best fit that describes the linear relationship between an independent variable and a dependent variable.