Gordon Company started operations on January 1, 2009, and has used the FIFO method of inventory valuation since its inception. In 2015, it decides to
Gordon Company started operations on January 1, 2009, and has used the FIFO method of inventory valuation since its inception. In 2015, it decides to switch to the average-cost method. You are provided with the following information. Net Income Retained Earnings (Ending Balance) Under FIFO Under Average-Cost Under FIFO
\r\n2009 $100,000 $ 90,000 $100,000
\r\n2010 70,000 65,000 160,000
\r\n2011 90,000 80,000 235,000
\r\n2012 120,000 130,000 340,000
\r\n2013 300,000 290,000 590,000
\r\n2014 305,000 310,000 780,000
\r\nInstructions
\r\n(a) What is the beginning retained earnings balance at January 1, 2011, if Gordon prepares comparative financial statements starting in 2011?
\r\n(b) What is the beginning retained earnings balance at January 1, 2014, if Gordon prepares comparative financial statements starting in 2014?
\r\n(c) What is the beginning retained earnings balance at January 1, 2015, if Gordon prepares singleperiod financial statements for 2015?
\r\n(d) What is the net income reported by Gordon in the 2014 income statement if it prepares comparative financial statements starting with 2012?