Lemon Automobiles has asked your bank for a $100,000 loan to expand its sales facility. Lemon provides you with the following data:

* The 2016 ending inventory was $470,000 (FIFO).
Your inspection of the financial statements of other automobiles sales firms indicates that most of these firms adopted the LIFO method in the late 1970s. You further note that Lemon has used 5% of depreciable asset cost when computing depreciation expense and that other automobile dealers use 10%. Assume that Lemon's effective tax rate is 25% of income before tax. Also assume the following:

* The 2016 ending inventory was $470,000 (LIFO).
Required:
1. Compute cost of goods sold for 2017-2019, using both the FIFO and the LIFO methods.
2. Compute depreciation expense for Lemon for 2017-2019, using both 5% and 10% of the cost of depreciable assets.
3. Re-compute Lemon's net income for 2017-2019, using LIFO and 10% depreciation. (Don't forget the tax impact of the increases in cost of goods sold and depreciation expense.)
4. Explain whether Lemon appears to have materially changed its financial statements by the selection of FIFO (rather than LIFO) and 5% (rather than 10%) depreciation.

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2019 2018 2017 Sales revenue Net income Ending inventory (FIFO)* Purchases Depreciable assets $6,100,000 $5,800,000 112,000 600,000 5,105,000 1,150,000 $5,400,000 665,000 5,370,000 1,240,000 4,860,000 1,090,000 2019 2018 2017 Ending inventory (LIFO)* $508,000 $495,000 $480,000