Linden Corporation started operations on January 1, 2006, and has used the FIFO method of inventory valuation since its inception. In 2012, it decides to switch to the average cost method. You are provided with the following information.

Instructions
(a) What is the beginning retained earnings balance at January 1, 2008, if Linden prepares comparative financial statements starting in 2008?
(b) What is the beginning retained earnings balance at January 1, 2011, if Linden prepares comparative financial statements starting in 2011?
(c) What is the beginning retained earnings balance at January 1, 2012, if Linden prepares single-period financial statements for 2012?
(d) What is the net income reported by Linden in the 2011 income statement if it prepares comparative financial statements starting in 2009?

Transcribed Image Text:

Net Income 2006 2007 2008 2009 2010 2011 Under FIFO $100,000 70,000 90,000 120,000 300,000 305,000 Under Average Cost 92,000 65,000 85,000 130,000 293,000 310,900 Retained Earnings (Ending Balance) Under FIFO $100,000 160,000 235,000 340,000 590,000 780,000