60.1K

Verified Solution

Link Copied!

The management of Marin Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Marin changed its method of pricing inventory from last-in, first out (LIFO) to average-cost in 2017, Given below is the 5-year su mary of income under LIFO and a schedule of what the inventories would be if stated on the average-cost method. MARIN INSTRUMENT COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED MAY 31 2013 2014 2015 2016 2017 14,030 $15,650 $16,710$18,150$18,910 Cost of goods sold 990 12,950 13,840 14,920 15,920 17,523 (1,120) (1,000) (1,110) (1,240) (1,360) 12,820 13,960 14,81015,790 17.403 1,210 1 5o 1,000 1,240 1,120 1,110 Ending inventory Total 1.9002,360 Gross profit 700 910 1,070 Income before taxes Income taxes (50%) Net income Retained earnings-beginning Retained earnings ending 510 527 264 263 460 535 1,915 $1,4551,915 $2,4503,175 s3,438 $5.35 255 460 1,200 2,450 $2.55 $4.60 $2.63 s per share $7.25 SCHEDULE OF INVENTORY BALANCES USING AVERAGE-COST METHOD FOR THE YEARS ENDED MAY 31 2012 2013 2014 2015 2016 2017 $1,000 $1,110 $1,260 $1,140 $1,500 $1,720 Prepare comparative statements for the 5 years, assuming that Marin changed its method of inventory pricing to average-cost. Indicate the effects on net income and earnings per share for the years involved. Marin Instruments started business in 2012. (Enter amounts that decrease cost of goods sold using either a negative sign preceding the number e.g.-15,000 or parentheses e.g. (15,000). Round all amounts except EPS to the nearest whole dollar, c.g.5,275. Round Earnings Per Share to 2 decimal placcs, e.g. 1.62. Round up the tax cffects to the next whole dollar.) MARIN INSTRUMENT COMPANY Statement of Income and Retained Earnings For the Years Ended May 31 2016 2013 2014 2015 2017 Sales-net Cost of goods sold Beginning inventory Purchases Ending inventory Total Gross profit Administrative expenses Income before taxes Income taxes Net income Retained earnings-beginning As originally reported Adjustment As restated Retained earnings-ending Earnings per share

Answer & Explanation Solved by verified expert

See Answer