The Jack Company began its operations on January 1, 2016, and used the LIFO method of accounting for its inventory. On January 1, 2018, Jack Company adopted FIFO in accounting for its inventory. The following information is available regarding cost of goods sold for each method:
?
LIFO Cost of
FIFO Cost of
Year
Goods Sold
Goods Sold
2016
$470,000
$350,000
2017
690,000
450,000
2018
700,000
540,000
Assuming a tax rate of 35% and the same accounting change adopted for tax purposes, how would the effect of the accounting change be reported in opening retained earnings on the 2018 financial statements?
A. +$360,000 restatement
B. +$234,000 restatement
C. -$700,000 restatement
D. no restatement
Answer: B
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