Zehms Company began operations in 2020 and adopted weighted-average pricing for inventory. In 2022, in accordance with other companies in its industry, Zehms changed its inventory pricing to FIFO. The pretax income data is reported below.
Instructions
a. What is Zehms’s net income in 2022? Assume a 35% tax rate in all years.
b. Compute the cumulative effect of the change in accounting principle from weightedaverage to FIFO inventory pricing.
c. Show comparative income statements for Zehms Company, beginning with income before income tax, as presented on the 2022 income statement.
