Ramirez Co. decides at the beginning of 2010 to adopt the FIFO method of inventory valuation. Ramirez had used the LIFO method for financial reporting since its inception on January 1, 2008, and had maintained records adequate to apply the FIFO method retrospectively. Ramirez concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The table below presents the effects of the change in accounting principles on inventory and cost of goods sold.

	Inventory Determined by	Cost of Goods Sold Determined by
Date	LIFO Method	FIFO Method	LIFO Method	FIFO Method
January 1, 2008	$ 0	$ 0	$ 0	$ 0
December 31, 2008	100	80	800	820
December 31, 2009	200	240	1,000	940
December 31, 2010	320	390	1,130	1,100

Retained earnings reported under LIFO are as follows:

		Retained Earnings Balance
	December 31, 2008	$2,200
	December 31, 2009	4,200
	December 31, 2010	6,070

Other information:

1. For each year presented, sales are $4,000 and operating expenses are $1,000.
2. Ramirezprovidestwoyearsoffinancialstatements.Earningspershareinformationisnotrequired

(a)Complete the income statements under LIFO and FIFO for 2008, 2009, and 2010.

Ramirez Co.
Income Statement
For the Year Ended December 31
LIFO
	2008	2009	2010
Sales	$	$	$
Cost of goods sold
Operating expenses
Net Income	$	$	$

Ramirez Co.
Income Statement
For the Year Ended December 31
FIFO
	2008	2009	2010
Sales	$	$	$
Cost of goods sold
Operating expenses
Net Income	$	$	$

(b)Complete the income statements reflecting the retrospective application of the accounting change from the LIFO method to the FIFO method for 2010 and 2009.

Ramirez Co.
Income Statement
For the Year Ended December 31
	2010	2009
Sales	$	$
Cost of goods sold
Operating expenses
Net Income	$	$

(c)Complete the note to the financial statements indicating the financial statement line items for 2010 and 2009 that were affected by the change in accounting principle.

	2010	2009
Balance Sheet	LIFO	FIFO	Difference	LIFO	FIFO	Difference
Inventory	$	$	$	$	$	$
Retained Earnings
Income Statement
Cost of goods sold
Net income

(d)Complete the comparative retained earnings statements for 2009 and 2010 under FIFO.(If answer is zero, please enter 0. Do not leave any fields blank.)

	2010	2009
Retained earnings, January 1, as reported	$	$
Less: Adjustment for cumulative effect of
applying new accounting method (FIFO)
Retained earnings, January 1, as adjusted
Net income
Retained earnings, December 31	$	$