Problem 22-01 The management of Bramble Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Bramble changed its method of pricing inventory from last-in, first out (LFO) to average cost in 2020. Given below is the 5-year summary of income under LIFO and a schedule of what the inventories would be if stated on the average-cost method. 2020 $18.760 BRAMBLE INSTRUMENT COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED MAY 31 2016 2017 2018 2019 Sales-net $14,090 $15.380 $16,810 $18.280 Cost of goods sold Beginning inventory 1,010 1.100 990 1,110 Purchases 13,080 13,830 14,900 15.910 Ending inventory (1.100) (990) (1.110) (1.220) Total 12.990 13,940 14,780 15,800 Gross profit 1.100 1.440 2.030 2.480 Administrative expenses 700 770 340 900 Income before taxes 400 670 1.199 1.580 Income taxes (50%) 200 335 595 Net income 200 335 595 790 Retained earnings--beginning 1.200 1.400 1.735 2.330 Retained earnings-ending $1.400 $1.735 52.330 $3,120 Earnings per share $2.00 $3.35 $5.95 $7.90 1.220 17,448 (1.350) 17,318 1.442 980 462 231 231 3.120 $3,351 52.31 790 SCHEDULE OF INVENTORY BALANCES USING AVERAGE-COST METHOD FOR THE YEARS ENDED MAY 31 2015 2016 2017 2018 2019 2020 $1.020 $1,130 $1.110 51.260 $1.480 51.700 Prepare comparative statements for the years, assuming that Bramble changed its method of inventory pricing to average-cost. Indicate the effects on net income and camingu per share for the years involved Bramble Instruments started business in 2015. Assume that the number of shares outsanding is 100. (Enter amounts that decrease cost of goods sold using either a negative sin preceding the number o g. 15,000 or parentheses .. (15.000). Round all amounts except EPS to the nearest whole dollar... 5.225. Round Earnings Per Share to 2 decimal places... 1.02. Round up the tax effects to the next whole dollar) BRAMBLE INSTRUMENT COMPANY Statement of Income and Retained Earnings For the Year Ended May 31 2016 2012 2018 2019 2020 Sales Cont of goods sold Beginning inventory D Prepare comparative statements for the years, assuming that Bramble changed its method of inventory pricing to average-cout Indicate the effects on net income and eaming per share for the years involved, Bramble Instruments started business in 2015. Asume that the number of shares outsanding is 100, amount that decrease cost of goods sold using either a negative sin preceding the member 15.000 or parentheses (15.000) Mond all amounts IPS to the nearest whole dollar 225. Round Earnings Per Share to decimal places. Lo Hound up the effects to the next whole dollar) BRAMBLE INSTRUMENT COMPANY Statement of Income and Retained Earnings For the Years Ended May 31 2016 2017 2013 2010 2020 Sales-net Cost of goods sold Beginning inventory Purchases Ending inventory Total Gross profit Administrative expenses Income before taxes Income taxes Not income Retained earnings-beginning As originally reported Adjustment As restated Retained earnings--ending Earnings per share
