The management of Utrillo Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Utrillo changed its method of pricing inventory from last-in, first-out (LIFO) to average-cost in 2025. Given below is the 5-year summary of income under LIFO and a schedule of what the inventories would be if stated on the average-cost method.

Instructions

Prepare comparative statements for the 5 years, assuming that Utrillo changed its method of inventory pricing to average-cost. Indicate the effects on net income and earnings per share for the years involved. Utrillo Instruments started business in 2020. (All amounts except EPS are rounded up to the nearest dollar.)

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Sales revenue-net Cost of goods sold Beginning inventory Purchases Ending inventory Total Gross profit Administrative expenses Utrillo Instrument Company Statement of Income and Retained Earnings For the Years Ended May 31 Income before taxes Income taxes (50%) Net income Retained earnings-beginning Retained earnings-ending Earnings per share 2021 $13,964 1,000 13,000 (1,100) 12,900 1,064 700 364 182 182 1,206 $1,388 $ 1.82 2022 $15,506 1,100 13,900 (1,000) 14,000 1,506 763 743 372 371 1,388 $1,759 $ 3.71 2023 $16,673 1,000 15,000 (1,115) 14,885 1,788 832 956 478 478 1,759 $ 2,237 $4.78 2024 $18,221 1,115 15,900 (1,237) 15,778 2,443 907 1,536 768 768 2,237 $ 3,005 $ 7.68 2025 $18,898 1,237 17,100 (1,369) 16,968 1,930 989 941 471 470 3,005 $ 3,475 $4.70