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:

Equilibrium Price

The cost where the supply of goods meets the demand for those goods.

Tax Revenues

The funds collected by governments through the process of levying taxes.

Point Elasticity

The measure of how much the quantity demanded of a good responds to a change in price at a specific point on the demand curve.

Producer Surplus

The difference between the amount a producer is paid for a good and the minimum amount they are willing to accept for producing it.