Question $10)$ Mary company implemented the following accounting changes in $2023$:

During $2023$ it became apparent that increased demand for products would force the

company to replace its equipment earlier than originally anticipated. The equipment

was purchased on January $1,2021$ for $$100,000.$ At that time the expected economic

life, which is equal to the expected useful life, was $10$ years and salvage value was

estimated at $$30,000.$ Now, management is convinced the equipment will be

disposed of on December $31,2026,$ for $$6000.$ No depreciation has been recorded in

$2023$ for this equipment.

It was discovered that a patent was being amortized over its legal life of $17$ years,

instead of its useful life of $5$ years. The patent was purchased on january $1,2021,$ for

$$25,000$

The company decided to change its inventory value method from FIFO to

weighted$-$average. Under FIFO beginning and ending inventory for $2023$ would have

been $$12,000$ and $$16,000,$ respectively. Under weighted$-$average, the ending

inventory is valued at $$13,000.$ Unfortunately, the existing records do not allow the

re$-$creation of the weighted$-$average inventory for previous years.

Additional information:

Net income for $2023.$ Before considering the above information was $$16,000.$ December $31,$

$2022$ retained earnings had a balance of $$30,000.$ Mary's company declared $$18,000$ of

dividends during $2023$ but paid $$10,000.$ Disregard tax implications

Required:

For each change:

State the type of change

State how each change should be treated, and

Prepare journal entries to record the changes

Also, prepare a statement of retained earnings for $2023.$