Cullumber Company began operations in 2015 and for simplicity reasons, adopted weighted-average pricing for inventory. In 2017, in accordance with other companies in its industry, Cullumber changed its inventory pricing to FIFO. The pretax income data is reported below.
Year Weighted-Average FIFO
2015 $379,700 $401,700
2016 407,400 427,900
2017 413,500 469,200
A) What is Cullumber’s net income in 2017? Assume a 35% tax rate in all years.
B) Compute the cumulative effect of the change in accounting principle from weighted-average to FIFO inventory pricing.
C) Show comparative income statements for Cullumber Company, beginning with income before income tax, as presented on the 2017 income statement.
2017 2016 2015
Income before income tax
Income tax
Net income