Koopman Company began operations on January $1,2015,$ and uses the FIFO inventory method for financial reporting and the average cost inventory method for income taxes. At the beginning of $2017,$ Koopman decided to switch to the average cost inventory method for financial reporting. It had previously reported the following financial statement information for $2016$:

KOOPMAN COMPANY

Income Statement

For the Year Ended December $31,2016$

$1$

Revenues

$$100,000\mathrm{.}00$

$2$

Cost of goods sold

$(60,000\mathrm{.}00)$

$3$

Gross profit

$$40,000\mathrm{.}00$

$4$

Operating expenses

$(25,000\mathrm{.}00)$

$5$

Income before income taxes

$$15,000\mathrm{.}00$

$6$

Income tax expense

$(4,500\mathrm{.}00)$

$7$

Net income

$$10,500\mathrm{.}00$

$8$

Earnings per share

$$1\mathrm{.}05$

KOOPMAN COMPANY

Retained Earnings Statements

For Year Ended December $31,2016$

$1$

Beginning retained earnings

$$15,000\mathrm{.}00$

$2$

Add: Net income

$10,500\mathrm{.}00$

$3$

$$25,500\mathrm{.}00$

$4$

Less: Dividends

$(6,000\mathrm{.}00)$

$5$

Ending retained earnings

$$19,500\mathrm{.}00$

KOOPMAN COMPANY

Balance Sheet

December $31,2016$

$1$

Assets

Liabilities and Shareholders$$ Equity

$2$

Cash

$$9,000\mathrm{.}00$

Accounts payable

$$3,000\mathrm{.}00$

$3$

Inventory

$38,000\mathrm{.}00$

Income taxes payable

$1,800\mathrm{.}00$

$4$

Other assets

$64,100\mathrm{.}00$

Deferred tax liability

$4,800\mathrm{.}00$

$5$

Common stock, no par

$82,000\mathrm{.}00$

$6$

Retained earnings

$19,500\mathrm{.}00$

$7$

$$111,100\mathrm{.}00$

$$111,100\mathrm{.}00$

An analysis of the accounting records discloses the following cost of goods sold under the FIFO and average cost inventory methods:

FIFO Cost of Goods Sold

Average Cost of Goods Sold

$2015$ $$50,000$ $$57,000$

$201660,00069,000$

$201770,00080,000$

There are no indirect effects of the change in inventory method. Revenues for $2017$ total $$130,000$; operating expenses for $2017$ total $$30,000.$ Koopman is subject to a $30\%$ income tax rate in all years; it pays the income taxes payable of a current year in the first quarter of the next year. Koopman had $10,000$ shares of common stock outstanding during all years; it paid dividends of $$1$ per share in $2017.$ At the end of $2017,$ Koopman had cash of $$10,000,$ inventory of $$24,000,$ other assets of $$70,800,$ accounts payable of $$4,500,$ and income taxes payable of $$6,000.$ It desires to show financial statements for the current year and previous year in its $2017$ annual report.

Required:

$1.$ Prepare the journal entry to reflect the change in methods at the beginning of $2017.$ Show supporting calculations.

$2.$ Prepare the $2017$ financial statements. Notes to the financial statements are not necessary. Show supporting calculations.