Baker Corporation Changed from the LIFO Method to the FIFO

question 54

Multiple Choice

Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2013. Baker has an effective income tax rate of 30 percent 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 2013 and that $400,000 net income is earned during the second quarter, how much is reported as net income for the second quarter of 2013?

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

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Definitions:

Resources

Assets, materials, and other inputs required by organizations or individuals to produce goods or services.

Equipment

The necessary items for a particular purpose or task, typically involving machinery, tools, or devices required in a professional or recreational activity.

Staffing

The process of identifying, evaluating, and selecting individuals for roles within an organization, ensuring the right fit between the job and the employee.

Cognitively Diverse

Refers to a group characterized by differences in their modes of thinking, problem-solving skills, and ways of processing information.