The management of Novak Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Novak changed its method of pricing inventory from last-in, first-out (LIFO) to average-cost in 2017. 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

Problem 22-1 The management of Novak Instrument Company had concluded, with the concurrence of its ndependent auditors, that results of operations would be more fa rly presented f Novak changed its method of pricing inventory from last-in, first-out (LIFO) to average-cost n 2017. Given below is the 5-yea summary of inco under LIFO al nd a sched ule of what the inventori ess would be if stated on the average-cost method. NOVAK INSTRUMENT COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED MAY 31 2013 2014 2015 2016 2017 Sales $14,070 $15,470 $16,570 $18,290 $18,760 Cost of goods sold Beginning inventory 17,456 Purchases Ending inventory Total 2,570 profit Administrative expenses Income before taxes Income taxes (50%) Net income Retained earnings-beginning Retained earnings ending $1,485 $1,900 $2,355 $3,185 $3,422 Ea innings per share $2.37 SCHEDULE OF INVENTORY BALANCES USING AVERAGE-COST METHOD FOR THE ENDED MAY 31 2012 2013 2014 2015 2016 2017 $1,000 $1,100 $1,130 $1,280 $1,490 $1,740 Prepare comparative statements for the 5 years, assuming that Novak changed its method of nventory pricing to average-cost. Indicate the effects on net income and earnings per share for the years involved. Novak Instruments started business in 2012. (Enter amounts that decrease cost of goods sold using either a negative sign ing 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.)