Shown below are the detailed periodic inventory income and retained earnings statements for Years 6 through 10 for Coop, Inc. Coop has been using the LIFO (Last-in, first-out) cost flow approach. Also shown are the Y9 and Y10 comparative balance sheets, using LIFO. Y9 $ 18,221 Y8 $ 16,673 Y6 Y7 $ 15,506 - $ 13,964 Income Statements Y10 Sales - net $ 18,898 Cost of goods sold Beginning inventory 1.237 Purchases 17.100 Ending inventory (1.369) Cost of goods sold 16.968 Gross profit 1,930 Administrative expenses 989 Income before taxes 941 Income tax expense (25%) 235 Net income 706 Beginning retained earnings 3.449 Ending retained earnings $ 4,155 1,115 15,900 (1,237) 15.778 2.443 1,000 15.000 (1.115) 14.885 1.788 832 956 239 717 1,580 2.297 907 1,100 13,900 (1.000) 14,000 1,506 763 743 186 557 1,023 1,580 13,000 (1.100) 11.900 2,064 700 1,364 341 1,023 1,536 384 1.152 2.297 3,449 $ $ $ $ 1,023 Y9 Balance Sheets Y10 Cash 190 Accounts receivable 4,548 Inventories 1,369 Plant and equipment 11.000 Total assets $ 17,107 Accounts payable 1,900 Taxes payable 518 Long-term debt 8,106 Total liabilities 10,524 Common stock 1.000 Additional paid in capital 1.428 Retained earnings 4.155 Total stockholders' equity 6,583 Total liab & SE 17.107 $ 230 3.896 1.237 11,000 $ 16,363 $ 1,650 430 8,406 10,486 1.000 1,428 3.449 5,877 S16,363 At the end of Y10, Coop, Inc., decided that the average-cost flow assumption would be more appropriate in valuing its inventories, and decided to make the change to average-cost in Y10. For your information, Y6 was Coop's first year of operations and to account for the effect of the change, Coop decided to use as a starting point Y6 ending inventory. Ending inventory values using the average-cost flow assumption are shown below. Y10 Y9 $1,720 $1,500 $1,270 $1.101 YB Y7 - Y6 $1,124 Instructions: 1 Please re-prepare the income statements for Y6 through Y10 using the average-cost flow approach. Income statement templates are on the next page. And please remember the following: (a) the ending Inventory for one year becomes the beginning inventory for the following year, and (b) purchases remain the same, the cost flow assumption used to value inventories does not affect the cost of purchases. 2 Prepare the Y10 journal entries to record this change in accounting principle. 3 Using the template provided, please prepair the Y9 and Y10 comparative balance sheets, and statements of retained earnings, using the average-cost cost flow assumption. goods sold: aning inventory hases ng inventory st of goods sold profit strative expenses before taxes tax expense (25%) ome ing retained earnings retained earnings journal entries 1 Debit Credit 3 - reprepared statements of retained earnings and balance sheets, Y9 and Y10 Y9 Statements of Retained Earnings Y10 Beginning retained earnings Cumulative effect to Nl of Y6 thru Y8 from GAAP change Net income Ending retained earnings Balance Sheets (Avg cost) Y10 Cash Accounts receivable Inventories Plant and equipment Total assets Accounts payable Taxes payable Long-term debt Total liabilities Common stock Additional paid in capital Retained earnings Total stockholders' equity Total liab & SE Shown below are the detailed periodic inventory income and retained earnings statements for Years 6 through 10 for Coop, Inc. Coop has been using the LIFO (Last-in, first-out) cost flow approach. Also shown are the Y9 and Y10 comparative balance sheets, using LIFO. Y9 $ 18,221 Y8 $ 16,673 Y6 Y7 $ 15,506 - $ 13,964 Income Statements Y10 Sales - net $ 18,898 Cost of goods sold Beginning inventory 1.237 Purchases 17.100 Ending inventory (1.369) Cost of goods sold 16.968 Gross profit 1,930 Administrative expenses 989 Income before taxes 941 Income tax expense (25%) 235 Net income 706 Beginning retained earnings 3.449 Ending retained earnings $ 4,155 1,115 15,900 (1,237) 15.778 2.443 1,000 15.000 (1.115) 14.885 1.788 832 956 239 717 1,580 2.297 907 1,100 13,900 (1.000) 14,000 1,506 763 743 186 557 1,023 1,580 13,000 (1.100) 11.900 2,064 700 1,364 341 1,023 1,536 384 1.152 2.297 3,449 $ $ $ $ 1,023 Y9 Balance Sheets Y10 Cash 190 Accounts receivable 4,548 Inventories 1,369 Plant and equipment 11.000 Total assets $ 17,107 Accounts payable 1,900 Taxes payable 518 Long-term debt 8,106 Total liabilities 10,524 Common stock 1.000 Additional paid in capital 1.428 Retained earnings 4.155 Total stockholders' equity 6,583 Total liab & SE 17.107 $ 230 3.896 1.237 11,000 $ 16,363 $ 1,650 430 8,406 10,486 1.000 1,428 3.449 5,877 S16,363 At the end of Y10, Coop, Inc., decided that the average-cost flow assumption would be more appropriate in valuing its inventories, and decided to make the change to average-cost in Y10. For your information, Y6 was Coop's first year of operations and to account for the effect of the change, Coop decided to use as a starting point Y6 ending inventory. Ending inventory values using the average-cost flow assumption are shown below. Y10 Y9 $1,720 $1,500 $1,270 $1.101 YB Y7 - Y6 $1,124 Instructions: 1 Please re-prepare the income statements for Y6 through Y10 using the average-cost flow approach. Income statement templates are on the next page. And please remember the following: (a) the ending Inventory for one year becomes the beginning inventory for the following year, and (b) purchases remain the same, the cost flow assumption used to value inventories does not affect the cost of purchases. 2 Prepare the Y10 journal entries to record this change in accounting principle. 3 Using the template provided, please prepair the Y9 and Y10 comparative balance sheets, and statements of retained earnings, using the average-cost cost flow assumption. goods sold: aning inventory hases ng inventory st of goods sold profit strative expenses before taxes tax expense (25%) ome ing retained earnings retained earnings journal entries 1 Debit Credit 3 - reprepared statements of retained earnings and balance sheets, Y9 and Y10 Y9 Statements of Retained Earnings Y10 Beginning retained earnings Cumulative effect to Nl of Y6 thru Y8 from GAAP change Net income Ending retained earnings Balance Sheets (Avg cost) Y10 Cash Accounts receivable Inventories Plant and equipment Total assets Accounts payable Taxes payable Long-term debt Total liabilities Common stock Additional paid in capital Retained earnings Total stockholders' equity Total liab & SE