Keairnes Supplies decided to change from LIFO to FIFO as of January 1, 2013. The change is being made for both book and tax purposes.

1. Using LIFO, the beginning retained earnings as of January 1, 2011, was $182,000. Compute adjusted beginning retained earnings, using FIFO, as of January 1, 2011.
2. The 3-year comparative income statement for 2013 includes net income for 2011, 2012, and 2013. In that comparative income statement, prepared after the change for FIFO has been adopted, what amount of net income will be reported for each year?

Transcribed Image Text:

Net Income Computed Using LIFo Excess of LIFO Cost of Goods Sold over FIFO Cost of Goods Sold Income Effect (Net of Tax) Year $14,000 $9,000 4,800 2011 7,200 2012 61,500 8,750 5,250 7,500 Mi,000 10,500 $40,450 $26,550