Nidal Company Reported Inventory in the 2017 Year-End Balance Sheet

question 80

Multiple Choice

Nidal Company reported inventory in the 2017 year-end balance sheet, using the FIFO method, as $185,000. In 2018, the company decided to change its inventory method to average cost. If the company had used the average cost method in 2017, ending inventory would have been $171,000. What adjustment would Nidal make for this change in inventory method?

• A) Debit Inventory for $14,000; Credit Cost of goods sold for $14,000.
• B) Debit Retained earnings for $14,000; Credit Inventory for $14,000.
• C) Debit Retained earnings for $14,000; Credit Cost of goods sold for $14,000.
• D) No adjustment is necessary.

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Definitions:

Coverage

Coverage refers to the extent of protection or benefits provided under an insurance policy, detailing what specific losses or incidents are financially protected.

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Insurance coverage that pays for injuries to others caused by the policyholder in an automobile accident.

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An insurance policy purchased by vehicle owners to mitigate costs associated with getting into an auto accident.

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