6 The Pyramid Company has used the LIFO method of accounting for inventory during its first two years of operation, 2016 and 2017. At the beginning of 2018, Pyramid decided to change to the average cost method for both tax and financial reporting purposes. The following table presents information concerning the change for 2016-2018. The income tax rate for all years is 40%. 1 points eBook Income before Income Tax Average Cost LIFO Income Difference Method Method Difference Tax Effect after Tax 2016 $ 87,600 $58,400 $ 29, 200 $11,680 $17,520 2017 43,000 34,400 8,600 3,440 5,160 Total $130, 600 $ 92,800 $ 37,800 $15,120 $ 22,680 2018 50,200 $ 45,600 $ 4,600 $ 1,840 $ 2,760 Print Pyramid issued 46,000 $1 par, common shares for $210,000 when the business began, and there have been no References changes in paid-in capital since then. Dividends were not paid the first year, but $12,000 cash dividends were paid in both 2017 and 2018 Required: 1. Prepare the journal entry to record the change in accounting principle. 2. Prepare the 2018-2017 comparative income statements beginning with income before income taxes. 3. Prepare the 2018-2017 comparative statements of shareholders' equity. (Hint: The 2016 statements reported retained earnings of $35,040. This is $58,400 - $58,400 x 40%]). Complete this question by entering your answers in the tabs below. Required Required Required 3 Prepare the journal entry to record the change in accounting principle. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Show less View transaction list Journal entry worksheet Record the change in accounting principle. Note: Enter debits before credits. General Journal Debit Credit Event 1 Record entry Clear entry general Journal Complete this question by entering your answers in the tabs below. Required Required Required 1 2 3 Prepare the 2018-2017 comparative income statements beginning with income before income taxes. (Round EPS answers to 2 decimal places.) COMPARATIVE INCOME STATEMENTS 2018 2017 Earnings per share Complete this question by entering your answers in the tabs below. Required Required Required 2 1 Prepare the 2018-2017 comparative statements of shareholders' equity. (Hint: The 2016 statements reported retained earnings of $35,040. This is $58,400 - [$58,400 x 40%]). (Negative amounts should be indicated by a minus sign.) Show less PYRAMID COMPANY Statement of Shareholders' Equity For the Years Ended Dec. 31, 2018 and 2017 Additional Total Common Paid-in Retained Sharehold Stock Earnings Capital Equity Balance at Jan. 1, 2017 Net income Cash dividends Balance at Dec. 31, 2017 Net income Cash dividends Balance at Dec 31, 2018