Question 7 of 7 View Policies Current Attempt in Progress -/35 The management of Crane Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Crane 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. CRANE INSTRUMENT COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED MAY 31 2016 2017 2018 2019 Sales-net $14,060 $15,510 $16,680 $18,380 2020 $18.930 Cost of goods sold Beginning inventory 1,010 1,110 1,010 1.120 1.230 Purchases 13,050 13,960 14,890 16,000 17.620 Ending inventory (1.110) (1,010) (1.120) (1,230) (1,360) Total 12,950 14.060 14,780 15,890 17,490 Gross profit 1,110 1,450 1.900 2.490 1,440 Administrative expenses 700 770 840 910 1,000 Income before taxes 410 680 1,060 1.580 440 Income taxes (50%) 205 340 530 790 220 Net income 205 340 530 790 220 Retained earnings-beginning 1,200 1,405 1.745 2.275 3,065 Retained earnings-ending $1,405 $1,745 $2,275 $3,065 $3,285 Earnings per share $2.05 $3.40 $5.30 $7.90 $2.20 SCHEDULE OF INVENTORY BALANCES USING AVERAGE-COST METHOD FOR THE YEARS ENDED MAY 31 2015 $1,020 2016 $1,130 2017 $1,130 2018 2019 2020 $1,280 $1,490 $1,710 azer