Baker Corporation Changed from the LIFO Method to the FIFO

question 38

Multiple Choice

Baker Corporation changed from the LIFO method to the FIFO method for inventory valuation during 2011. 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 2011 and that $400,000 net income is earned during the second quarter, how much is reported as net income for the second quarter of 2011?

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

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