Problem 22-01 The management of Nash Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Nash changed its method of pricing inventory from last-in, first-out (LIFO) 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 $18,820 NASH INSTRUMENT COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED MAY 31 2016 2017 2018 2019 Sales-net $14,040 $15,400 $16,760 $18,110 Cost of goods sold Beginning inventory 1,000 1,090 9 90 1,120 Purchases 13,070 13,840 14,960 15,960 Ending inventory (1,090) (990) (1,120) (1,250) Total 12,980 13,940 14,830 15,830 Gross profit 1,060 1,460 1,930 20 2,280 2.280 Administrative expenses 590 760 840 900 Income before taxes 370 700 1,090 1,380 Income taxes (50%) 185 545 690 Net income 185 350 545 690 Retained earnings-beginning 1,220 1,405 1,755 2,300 Retained earnings-ending $1,405 $1,755 $2,300 $2,990 Earnings per share $1.85 $3.50 $5.45 $6.90 1,250 17,634 (1,380) 17,504 1,316 1,000 316 158 158 2,990 $3,148 350 SCHEDULE OF INVENTORY BALANCES USING AVERAGE-COST METHOD FOR THE YEARS ENDED MAY 31 2015 2016 2017 2018 2019 2020 51,010 $1,110 51,090 $1,270 51,510 51,740 Prepare comparative statements for the 5 years, assuming that Nash changed its method of inventory pricing to average-cost. Indicate the effects on net income and earnings per share for the years involved. Nash 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 sign preceding the number e.g.-15,000 or parentheses e.g. (15,000). Round all amounts except EPS to the nearest whole dollar, e.g. 5,275. Round Earnings Per Share to 2 decimal places, e.g. 1.62. Round up the tax effects to the next whole dollar.) NASH INSTRUMENT COMPANY Statement of Income and Retained Earnings For the Years Ended May 31 2017 2018 2016 2019 2020 Sales-net Cost of goods sold Beginning inventory Purchases Ending inventory Total Gross profit Administrative expenses Income before taxes Income taxes Net income Retained earnings-beginning: As originally reported Adjustment As restated Retained earnings-ending Earnings per share