In 2003, Athanasaw corporation changed its method of inventory pricing from LIFO to FIFO. Net income computed on a LIFO as compared to a FIFO basis for the four years involved is Ignore income taxes).

LIFO FIFO
2000 $71,700 $77,400
2001 78,500 82,100
2002 80,900 85,500
2003 86,700 88,900

Instructions
a)Indicate the net income that would be shown on comparative financial statements issued at 12/31/03 for each of the four years, assuming that the company changed to the FIFO method in 2003.

b)Assume that the company had switched from the average cost method to the FIFO method with net income on an average cost
basis for the four years as follows: 2000, $73,900; 2001,$79,900; 2002,$84,300; and 2003, $87,800. Indicate the net income that
would be shown on comparative financial statements issued at 12/31/03 for each of the four years under these conditions.

c) Assuming that the company switched from the FIFO to the LIFO method, what would be the net income reported on comparative
financial statements issued at 12/31/03 for 2000, 2001, and 2002?

Answers

a)
2000 5,700 (77,400-71,7000)
2001 $3,600 (82,100-78,500)
2002 4600 (85,500-80,900)
2003 2200 (88,900-86700)
16,100

Inventory 16,100
Retained Earning 16,100


Net income 2003 2002 2001 2000
88,900 85,500 82,100 77,400


b)Inventory 8,000
Retained Earning 8,000


(77,400+82,100+85,500+88,900)-(73,900+77,900+84,300+87,800)= 8000


Net income 2000 20001 2002 2003
77,400 82,100 85,500 88,900



c) I am not sure how to solve this one. Please help me.