M. Potter is the manager of Masson Company. Potter receives an annual salary plus a bonus of 15 percent of net income before bonus and taxes. Masson Company uses the LIFO inventory costing method. During 2010 when prices were increasing, M. Potter switched to the FIFO inventory method.


Don't use plagiarized sources. Get Your Custom Essay on
Just from $13/Page
Order Essay

Prepare an example that illustrates the effect on the income statement of switching from LIFO to FIFO.

In addition, show the effect of the switch on the balance sheet and the statement of cash flows.

A. Did net income increase or decrease?

B. Did ending inventory increase or decrease?

C. Did cash flows increase or decrease?

D. Could a change in inventory methods entitle M. Potter to a larger bonus than she was otherwise entitled to? Explain.

E. In this situation, was the change economically beneficial to the Masson Company? Explain.

Place Order
Grab A 14% Discount on This Paper
Pages (550 words)
Approximate price: -
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Try it now!

Grab A 14% Discount on This Paper

Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.