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Homework answers / question archive / Novak, Inc
Novak, Inc. changed from the LIFO cast flow assumption to the FIFO cost flow assumption in 2020, The increase in
the prior year s income before taxesis $1,300 500 The tax rate is 20%
Prepare Novak's 2020 journal entry to record the change in accounting principle. (Credit account titles are
automatically indented when amount is entered. Do not indent manually. If no entry is required,
select "No Entry” for the account titles and enter OQ for the amounts.)
Account Titles and Explanation Debit Credit
| Journal Entry: | ||
| Account Titles and Explanation | Debit | Credit |
| Inventory | $1,300,500 | |
| Deferred Tax Liability($1,300,500*20%) | $260,100 | |
| Retained Earnings | $1,040,400 | |
| (Being entry made to record the change in accounting principal) |
