The management of Wildhorse Instrument Company had concluded with the concurrence of its independent auditors that results of operations would be more fairly presented if Wildhorse 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. WILDHORSE INSTRUMENT COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED MAY 31 2016 2017 2018 2019 2020 $13.840 $15,520 $16.720 $18,340 $19,020 1,010 1.110 990 1.130 1,220 13.120 13,980 14,890 15.930 18.047 (1.110) (990) (1.130) (1.220) (1.360) 13,020 14,100 14.750 15,840 17.907 820 1,420 1.970 2.500 1,113 Sales-net Cost of goods sold Beginning inventory Purchases Ending inventory Total Gross profit Administrative expenses Income before taxes Income taxes (50%) Net income Retained earnings-beginning Retained earnings-ending Earnings per share 700 770 830 910 990 120 650 1.140 1,590 123 60 325 570 795 62 60 325 570 795 61 1,210 1,270 1.595 2,165 2.960 $1,270 $1,595 $2.165 $2.960 $3,021 $0.60 $3.25 $5.70 $7.95 $0.61 SCHEDULE OF INVENTORY BALANCES USING AVERAGE-COST METHOD FOR THE YEARS ENDED MAY 31 2015 2016 2017 2018 2019 2020 $1,020 $1,140 $1.090 $1.290 $1.480 $1,700 Prepere comperative statements for the 5 years, assuming that Wildhorse changed its method of inventory pricing to average-cost. Indicate the effects on net income and earnings per share for the years involved. Wildhorse 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 eg. 15,000 or parentheses eg. (15,000). Round all amounts except EPS to the nearest whole dollar, e.g. 5,275. Round Earnings Per Share to 2 decimal places, eg. 1.62. Round up the tax effects to the next whole dollar.) Prepere comparative statements for the 5 years, assuming that Wildhorse changed its method of inventory pricing to average-cost. Indicate the effects on net income and earnings per shere for the years involved. Wildhorse 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 eg. -15.000 or parentheses eg. (15,000). Round all amounts except EPS to the nearest whole dollar, eg. 5,275. Round Earnings Per Share to 2 decimal places, eg. 1.62. Round up the tax effects to the next whole dollar.) WILDHORSE INSTRUMENT COMPANY Statement of Income and Retained Earnings For the Years Ended May 31 2016 2017 2018 Sales-net $ S $ Cost of goods sold Beginning inventory Purchases Ending inventory Total Gross profit Administrative expenses Income before taxes Income taxes Net income Retained earnings-beginning: As originally reported Adjustment As restated Retained earnings-ending $ S $ Earnings per share $ $ $ 2019 2020 LA $ $ $ $ $ $
