blago wholesale company began operations on january 1 2017 and blago wholesale compa 4138198

Blago Wholesale Company began operations on January 1 2017 and

Blago Wholesale Company began operations on January 1, 2017, and uses the average cost method in costing its inventory. Management is contemplating a change to the FIFO method in 2018 and is interested in determining how such a change will affect net income. Accordingly, the following information has been developed:

____________________________________2017________________2018

Final inventory:

Average cost……………………………$150,000…………………$255,000

FIFO………………………………………..160,000………………….270,000

Condensed income statements for Blago Wholesale appear below:

_______________________________________________2017________________2018

Sales………………………………………………….$1,000,000……………..$1,200,000

Cost of goods sold………………………………………600,000…………………720,000

Gross profit………………………………………………400,000…………………480,000

Selling, general, and administrative……………………….250,000…………………275,000

Net income………………………………………………………$ 150,000………………$ 205,000

Required:

Based on this information, what would 2018 net income be after the change to the FIFO method? Ignore any income tax effects of this change in accounting method.

Blago Wholesale Company began operations on January 1 2017 and

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