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Change from FIFO to Average Cost Koopman Company began operations on January 1, 2012, and uses the FIFO inventory method for financial reporting and the average cost inventory method for income taxes. At the beginning of 2014 Koopman decided to switch to the average cost inventory method for financial reporting. It had previously reported the following fin ancial statement information for 2013: Income Statement 2013 Retained Earnings Statement 2013 Beginning retained eamings Add: Net income S 15,000 10,500 25,500 (6,000) $19,500 100,000 60 Revenues Cost of goods sold Gross profit Operating expenses Income before income taxes Income tax expense Net income 40,000 Less: Dividends Ending retained eamings S 15,000 Earnings per share $ 1.05 Balance Sheet (12/31/13) Cash Inventory Other assets $ 9,000 38,000 64,100 Accounts payable Income taxes payable Deferred tax liability Common stock, no par Retained earnings $ 3,000 1,800 4,800 82,000 19,500 $111,100 $111,100 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 2012 2013 2014 $50,000 60,000 70,000 57,000 69,000 80,000 There are no indirect effects of the change in inventory method. Revenues for 2014 total $130,000; operating expenses for 2014 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 2014 At the end of 2014, 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 2014 annual report. Required