(Comprehensive Accounting Change and Error Analysis Problem) Botticelli Inc. were organized in late 2010 to manufacture and sell hosiery. At the end of its fourth year of operation, the company has been fairly successful, as indicated by the following reported net incomes. 2010 $140,000a 2012 $205,000 2011 160,000b 2013 276,000 a Includes a $10,000 increase because of change in bad debt experience rate. b Includes extraordinary gain of $30,000. The company has decided to expand operations and has applied for a sizable bank loan. The bank officer has indicated that the records should be audited and presented in comparative statements to facilitate analysis by the bank. Botticelli Inc. therefore hired the auditing firm of Check & Double-check Co. and has provided the following additional information. 1. In early 2011, Botticelli Inc. changed its estimate from 2% to 1% on the amount of bad debt expense to be charged to operations. Bad debt expense for 2010, if a 1% rate had been used, would have been $10,000. The company therefore restated its net income for 2010. 2. In 2013, the auditor discovered that the company had changed its method of inventory pricing from LIFO to FIFO. The effect on the income statements for the previous years is as follows. 2010 2011 2012 2013 Net income unadjusted