Problem 22-1 The management of Pronghorn Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Pronghorn 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. 2017 $18,740 PRONGHORN INSTRUMENT COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED MAY 31 2013 2014 2015 2016 Sales-net $14,090 $15,490 $16,660 $18,380 Cost of goods sold Beginning inventory 990 1,090 1,010 1,130 Purchases 12,910 14,030 15,000 16,030 Ending inventory (1,090) (1,010) (1,130) (1,230) Total 12,810 14,110 14,880 15,930 Gross profit 1,280 1,380 1,780 2,450 Administrative expenses 700 760 840 900 Income before taxes 580 620 940 1,550 Income taxes (50%) 290 310 470 775 Net income 290 310 470 775 Retained earnings-beginning 1,200 1,490 1,800 2,270 Retained earnings-ending $1,490 $1,800 $2,270 $3,045 Earnings per share $2.90 $3.10 $4.70 $7.75 1,230 16,026 (1,370) 15,886 2,854 1,000 1,854 927 927 3,045 $3,972 $9.27 SCHEDULE OF INVENTORY BALANCES USING AVERAGE-COST METHOD FOR THE YEARS ENDED MAY 31 2012 2013 2014 2015 2016 2017 $1,000 $1,120 $1,120 $1,290 $1,490 $1,710 Prepare comparative statements for the 5 years, assuming that Pronghorn changed its method of inventory pricing to average-cost. Indicate the effects on net income and earnings per share for the years involved. Pronghorn 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.) nDONUDBI TUTORENT ORADA BIN PRONGHORN INSTRUMENT COMPANY Statement of Income and Retained Earnings For the Years Ended May 31 2013 2014 2015 2016 2017 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 U Earnings per share || Click if you would like to show Work for this question: Onen Show Work