Baker Corporation Changed from the LIFO Method to the FIFO

question 3

Multiple Choice

Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2021. Baker has an effective income tax rate of 35% and 100,000 shares of common stock issued and outstanding. The following additional information is available: Assuming Baker makes the change in the first quarter of 2021 and that $400,000 net income is earned during the second quarter, how much is reported as net income for the second quarter of 2021?

• A) $400,000.
• B) $405,200.
• C) $427,950.
• D) $894,850.
• E) $905,200.

---

Definitions:

Advertisement

A public notice especially in print, broadcast, or online, promoting the sale of goods or services.

Big Screen Television

A large television set, typically measuring over 55 inches diagonally, offering enhanced viewing experience for movies, sports, and other entertainment.

Intermodal Transportation

The use of multiple modes of transportation, such as trucks, ships, and trains, to move goods from origin to destination efficiently.

State Lines

Geographic boundaries that define the jurisdictional limits of a state within a country, affecting laws and regulations.