Botticelli SpA was organized in late 2016 to manufacture and sell hosiery. At the end of its fourth year of operation, the company has been fairly successful, as indicated by the following reported net incomes.

* Includes a ‚¬10,000 increase because of change in bad debt experience rate.
The company has decided to expand operations and has applied for a sizable bank loan. The bank officer has indicated that the records should be audited and presented in comparative statements to facilitate analysis by the bank. Botticelli therefore hired the auditing firm of Check & Doublecheck Co. and has provided the following additional information.
1. In early 2017, Botticelli changed its estimate from 2% to 1% of receivables on the amount of bad debt expense to be charged to operations. Bad debt expense for 2016, if a 1% rate had been used, would have been ‚¬10,000. The company therefore restated its net income for 2016.
2. In 2019, the auditor discovered that the company had changed its method of inventory pricing from average-cost to FIFO. The effect on the income statements for the previous years is as follows.

3. In 2019, the auditor discovered that:
a. The company incorrectly overstated the ending inventory by ‚¬14,000 in 2018.
b. A dispute developed in 2017 with the tax authorities over the deductibility of entertainment expenses. In 2016, the company was not permitted these deductions, but a tax settlement was reached in 2019 that allowed these expenses. As a result of the court's finding, tax expenses in 2019 were reduced by ‚¬60,000.
Instructions
a. Indicate how each of these changes or corrections should be handled in the accounting records. (Ignore income tax considerations.)
b. Present comparative net income numbers for the years 2016 to 2019. (Ignore income tax considerations.)

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2016 €140,000" 2018 €205,000 2017 160,000 2019 276,000 2016 2017 2018 2019 Net income unadjusted-average-cost basis €140,000 €160,000 €205,000 €276,000 Net income unadjusted-FIFO basis 155,000 165,000 215,000 260,000 € 15,000 € 5,000 € 10,000 (€ 16,000)