Tulip Company Decided to Change from LIFO to FIFO Inventory

question 110

Essay

Tulip Company decided to change from LIFO to FIFO inventory costing, effective January 1, 2018. The following data were available: The income tax rate is 35%. The company began operations on January 1, 2016, and has paid no dividends since inception.
Required:
Answer the following questions relating to the 2017-2018 comparative financial statements.
a. What is net income for 2018?
b. What is restated net income for 2017?
c. Prepare the 2017 statement of retained earnings as it would appear in the comparative
2017-2018 financial statements.

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Definitions:

Market Baskets

A collection of goods and services used to represent consumption patterns for economic analysis.

Total Utility

The cumulative satisfaction or pleasure a consumer derives from consuming a certain quantity of goods and services.

Utility

An indicator of the joy or contentment a buyer experiences from the consumption of products and services.

Indifference Curve

A graph that shows a combination of two goods that give a consumer equal satisfaction and utility, illustrating their preferences.