Problem: Presented below are income statements prepared on a LIFO and FIFO basis for Teal Company, which started operations on January 1, 2016. The company presently uses the LIFO method of pricing its inventory and has decided to switch to the FIFO method in 2017. The FIFO income statement is computed in accordance with the requirements of GAAP. Teal's profit-sharing agreement with its employees indicates that the company will pay employees 10% of income before profit-sharing. Income taxes are ignored.
|
|
LIFO Basis
|
FIFO Basis
|
|
2017
|
2016
|
2017
|
2016
|
|
Sales
|
$3,050
|
$3,050
|
$3,050
|
$3,050
|
|
Cost of goods sold
|
1,080
|
1,040
|
1,140
|
930
|
|
Operating expenses
|
1,040
|
1,040
|
1,040
|
1,040
|
|
Income before profit-sharing
|
930
|
970
|
870
|
1,080
|
|
Profit-sharing expense
|
93
|
97
|
98
|
97
|
|
Net income
|
$837
|
$873
|
$772
|
$983
|
Required:
Question 1: If comparative income statements are prepared, what net income should Teal report in 2016 and 2017?
Question 2: Assume that Teal has a beginning balance of retained earnings at January 1, 2017, of $873 using the LIFO method. The company declared and paid dividends of $480 in 2017. Prepare the retained earnings statement for 2017, assuming that Teal has switched to the FIFO method.
Grab the chance to get the finest Comparative Income Statements Assignment Help service at the most rational price for outstanding assignment solutions.
Tags: Comparative Income Statements Assignment Help, Comparative Income Statements Homework Help, Comparative Income Statements Coursework, Comparative Income Statements Solved Assignments, Retained Earnings Assignment Help, Retained Earnings Homework Help