Kamila Stores decided to change from LIFO to FIFO as of January 1, 2008. The change is being made for both book and tax purposes.

1. Using LIFO, the beginning retained earnings as of January 1, 2006, was $173,000. Compute adjusted beginning retained earnings, using FIFO, as of January 1, 2006.
2. The 3-year comparative income statement for 2008 includes net income for 2006, 2007, and 2008. In that comparative income statement, prepared after the change for FIFO has been adopted, what amount of net income will be reported for eachyear?

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Net Income Computed Using LIFO Excess of LIFO Cost of Goods Sold over Income Effect (Net of Tax) Year FIFO Cost of Goods Sold Prior to 2006 2006 2007 2008A% $62,500 54,500 78,000 $12,500 6,250 7,500 11.250 $37,500 $7,500 3,750 4,500 6,750 $22,500