In 2018, Fischer Corporation changed its method of inventory pricing from weighted average to LIFO. Net income computed on a weighted-average basis as compared to a LIFO basis for the four years involved is: (Ignore income taxes.)

Weighted avg. LIFO FIFO

2015 $98,200 $95,700 $108,000

2016 104,500 103,100 110,500

2017 107,000 101,400 109,000

2018 112,500 112,000 114,300

Instructions

a) Indicate the journal entry Fischer Corporation would record on 1/1/18 to show adjustment to retained earnings due to the change in accounting method from weighted-average to LIFO. Show your work to earn partial credit.

(b) Assume that the company had switched from the average cost method to the FIFO method with net income on an average cost basis for the four years (data provided in table above).

Indicate the net income that would be shown on comparative financial statements issued at 12/31/18 for each of the four years under these conditions.

(c) Using the original data, assume that retrospective application is impractical when the company switched from the weighted-average to the LIFO method, what would be the net income reported on comparative financial statements issued at 12/31/18 for 2015, 2016, 2017, and 2018?