Question - Gordon Company started operations on January 1, 2009, and has used the FIFO method of inventory valuation since its inception. In 2014, it decides to switch to the average cost method. You are provided with the following information.
|
Net Income
|
Retained Earnings
(Ending Balance)
|
|
Under FIFO
|
Under Average-Cost
|
Under FIFO
|
|
2009
|
$101,600
|
$91,360
|
$100,700
|
|
2010
|
70,830
|
65,750
|
159,940
|
|
2011
|
90,330
|
79,320
|
234,700
|
|
2012
|
119,710
|
130,890
|
340,030
|
|
2013
|
299,970
|
293,850
|
590,660
|
|
2014
|
304,480
|
310,410
|
779,660
|
(a) What is the beginning retained earnings balance at January 1, 2011, if Gordon prepares comparative financial statements starting in 2011?
(b) What is the beginning retained earnings balance at January 1, 2014, if Gordon prepares comparative financial statements starting in 2014?
(c) What is the beginning retained earnings balance at January 1, 2015, if Gordon prepares single-period financial statements for 2015?
(c) What is the beginning retained earnings balance at January 1, 2015, if Gordon prepares single-period financial statements for 2015?
(d) What is the net income reported by Gordon in the 2014 income statement if it prepares comparative financial statements starting with 2012?