Exercise 22-3 Taveras Co. decides at the beginning of 2014 to adopt the FIFO method of inventory valuation. Taveras had used the LIFO method for financial reporting since its inception on January 1, 2012, and had maintained records adequate to apply the FIFO method retrospectively. Taveras concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The table presents the effects of the change in accounting principle on inventory and cost of goods sold. Inventory Determined by Cost of Goods Sold Determined by Date LIFO Method FIFO Method LIFO Method FIFO Method January 1, 2012 $ 0 $ 0 $ 0 $ 0 December 31, 2012 100 80 800 820 December 31, 2013 200 240 1,000 940 December 31, 2014 320 390 1,130 1,100 Retained earnings reported under LIFO are as follows.

Retained Earnings Balance December 31, 2012 $1,200 December 31, 2013 2,200 December 31, 2014 3,070

Other information: 1. For each year presented, sales are $3,000 and operating expenses are $1,000. 2. Taveras provides two years of financial statements. Earnings per share information is not required. Correct answer. Your answer is correct.

Prepare income statements under LIFO for 2012, 2013, and 2014. TAVERAS CO. Income Statement For the Year Ended December 31 LIFO 2012 2013 2014 Entry field with correct answer $Entry field with correct answer 3000 $Entry field with correct answer 3000 $Entry field with correct answer 3000 Entry field with correct answer Entry field with correct answer 800 Entry field with correct answer 1000 Entry field with correct answer 1130 Entry field with correct answer Entry field with correct answer 1000 Entry field with correct answer 1000 Entry field with correct answer 1000 Entry field with correct answer $Entry field with correct answer 1200 $Entry field with correct answer 1000 $Entry field with correct answer 870

Prepare income statements under FIFO for 2012, 2013, and 2014. TAVERAS CO. Income Statement For the Year Ended December 31 FIFO 2012 2013 2014 Entry field with correct answer $Entry field with correct answer 3000 $Entry field with correct answer 3000 $Entry field with correct answer 3000 Entry field with correct answer Entry field with correct answer 820 Entry field with correct answer 940 Entry field with correct answer 1100 Entry field with correct answer Entry field with correct answer 1000 Entry field with correct answer 1000 Entry field with correct answer 1000 Entry field with correct answer $Entry field with correct answer 1180 $Entry field with correct answer 1060 $Entry field with correct answer 900 SHOW ANSWER LINK TO TEXT Correct answer. Your answer is correct.

Prepare income statements reflecting the retrospective application of the accounting change from the LIFO method to the FIFO method for 2014 and 2013. TAVERAS CO. Income Statement For the Year Ended December 31 2014 2013 Entry field with correct answer $Entry field with correct answer 3000 $Entry field with correct answer 3000 Entry field with correct answer Entry field with correct answer 1100 Entry field with correct answer 940 Entry field with correct answer Entry field with correct answer 1000 Entry field with correct answer 1000 Entry field with correct answer $Entry field with correct answer 900 $Entry field with correct answer 1060

*** Prepare comparative retained earnings statements for 2013 and 2014 under FIFO. 2014 2013