The Opal Company Was Incorporated and Began Operations on January

question 117

Essay

The Opal Company was incorporated and began operations on January 1, 2016. Opal used the weighted-average method for costing inventories. Effective January 1, 2017, Opal changed to FIFO for costing inventories and can justify the change. Information related to 2016 and 2017 inventory cost and net income is presented below: $\begin{array}{crr}&2016&2017\\\hline\text { Ending inventory, using: }\\\text { Weighted-average } & \$ 650,000 & \$ 620,000 \\\text { FIFO } & 680,000 & 630,000 \\\text { Net income } & 700,000 & 750,000 \\& \text { (using average) } & \text { (using FIFO) }\end{array}$ Opal's income tax rate is 30% for both 2016 and 2017.
Required:
Calculate the amount of the cumulative effect of the change on beginning retained earnings on January 1, 2017, that would appear on Opal's statement of retained earnings for the year ended December 31, 2017.

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Definitions:

Rh Incompatibility

A condition where a pregnant woman's blood type is Rh-negative and her unborn baby’s blood type is Rh-positive, potentially leading to health problems in the baby.

Rh-Positive

Refers to the presence of the Rh antigen on the surface of red blood cells, a significant factor in blood transfusion compatibility.

Rh-Negative

Refers to the absence of the Rh factor, a protein on the surface of red blood cells, significant in blood transfusion and pregnancy compatibility situations.

Rubella

A contagious viral disease characterized by a distinctive red rash, usually mild in children but can cause serious congenital defects if contracted by pregnant women.