Sheridan Co. decides at the beginning of 2020 to adopt the FIFO method of inventory valuation. Sheridan had used the LIFO method for financial reporting since its inception on January 1, 2018, and had maintained records adequate to apply the FIFO method retrospectively. Sheridan concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The following table presents the effects of the change in accounting principles on inventory and cost of goods sold. Income taxes are ignored.

Question 2 Sheridan Co. decides at the beginning of 2020 to adopt the FIFO method of inventory valuation. Sheridan had used the LIFO method for financial reporting since its inception on January 1, 2018, and had maintained records adequate to apply the FIFO method retrospectively. Sheridan concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The following table presents the effects of the change in accounting principles on inventory and cost of goods sold. Income taxes are ignored. Cost of Goods Sold Determined by Date January 1, 2018 December 31, 2018 December 31, 2019 December 31, 2020 Inventory Determined by LIFO FIFO Method Method $ 0 $ 0 110 9 210 240 290 380 LIFO Method $ 0 720 940 1,020 FIFO Method $ 0 821 809 960 Retained earnings reported under LIFO are as follows. December 31, 2018 December 31, 2019 December 31, 2020 Retained Earnings Balance $1,360 2,500 3,560 Other information: 1. 2. For each year presented, sales are $3,040 and operating expenses are $960. Sheridan provides two years of financial statements. Earnings per share information is not required. Prepare income statements under LIFO for 2018, 2019, and 2020. SHERIDAN CO. Income Statement For the Year Ended December 31 LIFO 2018 2019 2020 $ $ $ Prepare income statements under FIFO for 2018, 2019, and 2020. SHERIDAN CO. Income Statement For the Year Ended December 31 FIFO 2018 2019 2020 $ $ $ $ $ LINK TO TEXT Prepare income statements reflecting the retrospective application of the accounting change from the LIFO method to the FIFO method for 2020 and 2019. SHERIDAN CO. Income Statement For the Year Ended December 31 2019 2020 $ $ LINK TO TEXT Prepare comparative retained earnings statements for 2019 and 2020 under FIFO. 2019 2020 $ LINK TO TEXT