The Greenriver Manufacturing Company manufactures two products: Raft and Float. At December 31, 2001, Greenriver used the FIFO inventory method. Effective January 1, 2002, Greenriver changed to the LIFO inventory method. The cumulative effect of this change is not determinable, and as a result, the ending inventory for 2001 for which the FIFO method was used is also the beginning inventory for 2002 for the LIFO method.

Any layers added during 2002 should be costed by reference to the first acquisitions of 2002.

The information below was available from Greenriver inventory records for the 2 most recent vears:

Instructions: 

Compute the effect on net income for the year ended December 31, 2002. resulting from the change from the FIFO to the LIFO inventory method. Ignore income taxes.

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Raft Float Units Unit Cost Units Unit Cost 2001 purchases: January 7 5,000 $4.00 22,000 $2.00 April 16. 12,000 4.50 November 8 17,000 5.00 18,500 2.50 December 13 10,000 6.00 2002 purchases: February 11 3,000 7.00 23,000 3.00 May 20 8,000 7.50 October 15. 20,000 8.00 December 23 15,500 3.50 Units on hand: December 31, 2001 15,000 14,500 December 31, 2002 16,000 13,000