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Presented below are income statements prepared on a LIFO and FIFO basis for Crane Company,

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Presented below are income statements prepared on a LIFO and FIFO basis for Crane Company, which started operations on January 1, 2016. The company presently uses the LIFO method of pricing its inventory and has decided to switch to the FIFO method in 2017. The FIFO income statement is computed in accordance with the requirements of GAAP. Crane’s profit-sharing agreement with its employees indicates that the company will pay employees 10% of income before profit-sharing. Income taxes are ignored.

 

  LIFO Basis  FIFO Basis

  2017  2016  2017  2016

Sales  $3,040  $3,040  $3,040  $3,040

Cost of goods sold  1,070  1,000  1,050  920

Operating expenses  970  970  970  970

Income before profit-sharing  1,000  1,070  1,020  1,150

Profit-sharing expense  100  107  110  107

Net income  $900  $963  $910  $1,043

 

If comparative income statements are prepared, what net income should Crane report in 2016 and 2017? (Round answers to 0 decimal places, e.g. 125.)

 

Assume that Crane has a beginning balance of retained earnings at January 1, 2017, of $950 using the LIFO method. The company declared and paid dividends of $480 in 2017. Prepare the retained earnings statement for 2017, assuming that Crane has switched to the FIFO method. (Round answers to 0 decimal places, e.g. 125.)

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[Solved] Presented below are income statements prepared on a LIFO and FIFO basis for Crane Company,

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