Problem 22-1 The management of Metlock Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Metlock changed its method of pricing inventory from last-in, first-out (LIFO) to average-cost in 2017. 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. METLOCK INSTRUMENT COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED MAY 31 2013 2014 2015 2016 2017 Salesnet $14,000 $15,390 $16,560 $18,290 $18,900 Cost of goods sold Beginning inventory 1,000 1,090 1,010 1,130 1,240 Purchases 12,880 13,790 14,850 15,810 17,165 Ending inventory (1,090) (1,010) (1,130) (1,240) (1,380) Total 12,790 13,870 14,730 15,700 17,025 Gross profit 1,210 1,520 1,830 2,590 1,875 Administrative expenses 700 760 830 900 980 Income before taxes 510 760 1,000 1,690 895 Income taxes (50%) 255 380 500 845 448 Net income 255 380 500 845 447 Retained earningsbeginning 1,210 1,465 1,845 2,345 3,190 Retained earningsending $1,465 $1,845 $2,345 $3,190 $3,637 Earnings per share $2.55 $3.80 $5.00 $8.45 $4.47 SCHEDULE OF INVENTORY BALANCES USING AVERAGE-COST METHOD FOR THE YEARS ENDED MAY 31 2012 2013 2014 2015 2016 2017 $1,010 $1,110 $1,110 $1,280 $1,500 $1,730 Prepare comparative statements for the 5 years, assuming that Metlock changed its method of inventory pricing to average-cost. Indicate the effects on net income and earnings per share for the years involved. Metlock Instruments started business in 2012. (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.) METLOCK INSTRUMENT COMPANY Statement of Income and Retained Earnings For the Years Ended May 31 2013 2014 2015 2016 2017 Salesnet $ 14000 $ 15390 $ 16560 $ 18290 $ 18900 Cost of goods sold Beginning inventory 1010 1110 1110 1280 1500 Purchases 12880 13790 14850 15810 17165 Ending inventory -1110 -1110 -1280 -1500 -1730 Total 12750 13790 14680 15590 16935 Gross profit 1250 1600 1880 2700 1965 Administrative expenses 700 760 830 900 980 Income before taxes 850 840 1050 1800 985 Income taxes 425 420 525 900 492.50 Net income 425 420 525 900 492.50 Retained earningsbeginning: As originally reported 1210 1465 1845 2345 3190 Adjustment As restated 1635 1885 2370 3245 3682.50 Retained earningsending $ $ $ $ $ Earnings per share $ $ $ $ $ Click if you would like to Show Work for this question