Arnez Company began operations in 2021 and initially adopted the weighted-average method for inventory valuation. In 2023, in accordance with the inventory valuation policies followed by other companies in its industry, Arnez changed its inventory pricing to the FIFO method. The company still uses the weighted-average method of inventory valuation for income tax purposes. Arnez has a 30% tax rate. The pretax income data is reported as follows.

Required
a. What is J&S Arnez’s net income in 2023?

b. Compute the cumulative effect on retained earnings from the change in accounting principle from weighted average to FIFO pricing (up to but not including the year of the change).

c. Show condensed, comparative income statements for J&S Arnez Company, beginning with income before taxes, as presented on the 2023 income statement.

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Year 2021 2022 2023 Weighted Average $518,000 546,000 574,000 FIFO $553,000 602,000 630,000