The management of Headland Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Headland 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.

Prepare comparative statements for the 5 years, assuming that Headland changed its method of inventory pricing to average-cost. Indicate the effects on net income and earnings per share for the years involved. Headland Instruments started business in 2015. Assume that the number of shares outsanding is 100. (Enter amounts that decrease cost of goods sold using either a negative sign preceding the number e.g. -15,000 or parentheses e.g. (15,000). Round all amounts except EPS to the nearest whole dollar, e.g. 5,275. Round Earnings Per Share to 2 decimal places, e.g. 1.62. Round up the tax effects to the next whole dollar.)

HEADLAND INSTRUMENT COMPANY Statement of Income and Retained Earnings For the Years Ended May 31
		2016		2017		2018		2019		2020
Salesnet
Cost of goods sold
Beginning inventory
Purchases
Ending inventory
Total
Gross profit
Administrative expenses
Income before taxes
Income taxes
Net income
Retained earningsbeginning:
As originally reported
Adjustment
As restated
Retained earningsending
Earnings per share

HEADLAND INSTRUMENT COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED MAY 31 2016 2017 2018 2019 2020 Sales-net $13,990 $15,520 $16,690 $18,040 $18,920 Cost of goods sold Beginning inventory 1,000 1,090 1,000 1,100 1,230 Purchases 12,980 13,960 15,080 16,040 16,802 Ending inventory (1,090) (1,000) (1,100) (1,230) (1,360) Total 12,890 14,050 14,980 15,910 16,672 Gross profit 1,100 1,470 1,710 2,130 2,248 Administrative expenses 700 760 820 900 980 Income before taxes 400 710 890 1,230 1,268 Income taxes (50%) 200 355 445 615 634 200 355 445 615 634 Net income Retained earnings-beginning 1,200 1,400 1,755 2,200 2,815 $1,400 $1,755 $2,200 $2,815 $3,449 Retained earnings-ending Earnings per share $2.00 $3.55 $4.45 $6.15 $6.34 SCHEDULE OF INVENTORY BALANCES USING AVERAGE-COST METHOD FOR THE YEARS ENDED MAY 31 2015 2016 2017 2018 2019 2020 $1,010 $1,120 $1,110 $1,260 $1,490 $1,710