In preparation for significant expansion of its international operations, Pharoah Co. has adopted a plan to gradually shift to the same accounting methods as used by its international competitors. Part of this plan includes a switch from LIFO inventory accounting to FIFO (recall that IFRS does not allow LIFO). Pharoah decides to make the switch to FIFO at January 1, 2020. The following data pertains to Pharoahs 2020 financial statements (in millions of dollars).

Sales		$ 580
Inventory purchases		380
12/31/20 inventory (using FIFO)		610
Compensation expense		20

All sales and purchases were with cash. All of 2020s compensation expense was paid with cash. (Ignore taxes.) Pharoahs property, plant, and equipment cost $ 430 million and has an estimated useful life of 10 years with no salvage value. Pharoah Co. reported the following for fiscal 2019 (in millions of dollars):

Summary of Significant Accounting Policies Inventory: The company accounts for inventory by the LIFO method. The current cost of the companys inventory, which approximates FIFO, was $ 63 and $ 53 higher at the end of fiscal 2019 and 2018, respectively, than those reported in the balance sheet.

(a) Prepare Pharoahs December 31, 2020, balance sheet and an income statement for the year ended December 31, 2020. In columns beside 2020s numbers, include 2019s numbers as they would appear in the 2020 financial statements for comparative purposes. (List Assets in order of liquidity.)

PHAROAH CO. BALANCE SHEET AT DECEMBER 31, 2019 2019 2018 2019 2018 Cash $ 392 $ 230 Common stock $ 530 $ 530 Inventory 530 510 Retained earnings 736 597 Property, plant, and equipment 430 430 Accumulated depreciation (86) (43) Total assets $ 1.266 $ 1.127 Total equity $ 1.266 $ 1.127 PHAROAH CO. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2019 2019 Sales $ 530 Cost of goods sold (330) Depreciation expense (43) Compensation expense (18) Net income 139 PHAROAH CO. Balance Sheet 2020 2019 S S S PHAROAH CO. Income Statement 2020 2019 PHAROAH CO. BALANCE SHEET AT DECEMBER 31, 2019 2019 2018 2019 2018 Cash $ 392 $ 230 Common stock $ 530 $ 530 Inventory 530 510 Retained earnings 736 597 Property, plant, and equipment 430 430 Accumulated depreciation (86) (43) Total assets $ 1.266 $ 1.127 Total equity $ 1.266 $ 1.127 PHAROAH CO. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2019 2019 Sales $ 530 Cost of goods sold (330) Depreciation expense (43) Compensation expense (18) Net income 139 PHAROAH CO. Balance Sheet 2020 2019 S S S PHAROAH CO. Income Statement 2020 2019