Taveras Co. decides at the beginning of 2020 to adopt the FIFO method of inventory valuation. Taveras 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. Taveras 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. Inventory Determined by Cost of Goods Sold Determined by LIFO Method FIFO Method Date LIFO Method FIFO Method January 1, 2018 $0 $0 $0 $0 December 31, 2018 100 80 800 820 December 31, 2019 200 240 1,000 940 December 31, 2020 320 390 1,130 1,100 Retained earnings reported under LIFO are as follows. Retained Earnings Balance December 31, 2018 $1,200 December 31, 2019 2,200 December 31, 2020 3,070 Other information: 1. For each year presented, sales are $3,000 and operating expenses are $1,000. 2. Taveras provides two years of financial statements. Earnings per share information is not required. Prepare income statements reflecting the retrospective application of the accounting change from the LIFO method to the FIFO method for 2020 and 2019. TAVERAS CO. Income Statement For the Year Ended December 31 2019 2020 Sales $ 3000 3000 Cost of Goods Sold A 1100 940 Operating Expenses 1000 i 1000 i Net Income / (Loss) $ 900 1060 Prepare comparative retained earnings statements for 2019 and 2020 under FIFO. 2019 20 Retained Earnings, January 1, as reported tA Less : Adjustment for Cumulative Effect of Applying New Acounting Method A Retained Earnings, January 1, as adjusted $ ta 2240 Net Income /(Loss) 900 Retained Earnings, December 31 $ 3140 $