Iris Company Decided to Change from LIFO to FIFO Inventory

question 80

Essay

Iris Company decided to change from LIFO to FIFO inventory costing, effective January 1, 2012.The following data were available:
$\begin{array}{lrr}&& \text { Excess of FIFO}\\&& \text { Ending Inventory}\\& \text { Pretax Operating } & \text { Over LIFO } \\\text { Year } & \text { Income using LIFO } & \text { Ending Inventory }\\2012 & \$ 40,000 & \$ 8,000 \\2011 & 20,000 & 7,000 \\2010 & 30,000 & 4,000\end{array}$ The income tax rate is 40%.The company began operations on January 1, 2010, and has paid no dividends since inception.
Required:
Answer the following questions relating to the 2011-2012 comparative financial statements.
a. What is net income for 2012 ?
b. What is restated net income for 2011?
c. Prepare the 2011 statement of reteined earnings as it would appear in the comprative 2011-2012 financial statements

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Definitions:

Situation Analysis

A systematic collection and evaluation of past and present economical, political, social, and technological data, aimed at identification of internal and external forces that may influence the organization's performance.

Strategic Marketing Process

An organized technique for planning, executing, and evaluating marketing plans aimed at meeting business targets.

Planning Stage

The initial phase in a project or business strategy where goals are set, resources are allocated, and plans are developed to achieve objectives.

Marketing Mix

The combination of factors that can be controlled by a company to influence consumers to purchase its products, commonly referred to as the 4Ps: Product, Price, Place, and Promotion.