E4-14 (L05) (Change in Accounting Principle) Tim Mattke Company began operations in 2015 and for simplicity reasons, adopted weighted-average pricing for inventory. In 2017, in accordance with other companies in its industry, Mattke changed its inventory pricing to FIFO. The pretax income data is reported below.
Weighted-
Year Average FIFO 2015 $370,000 $395,000 2016 390,000 430,000 2017 410,000 450,000 Instructions

(a) What is Mattke’s net income in 2017? Assume a 35% tax rate in all years.

(b) Compute the cumulative effect of the change in accounting principle from weighted-average to FIFO inventory pricing.

(c) Show comparative income statements for Tim Mattke Company, beginning with income before income tax, as presented on the 2017 income statement.