Zehms Company began operations in 2013 and adopted weighted-average pricing for inventory. In 2015, in accordance with other companies in its industry, Zehms changed its inventory pricing to FIFO. The pretax income data is reported below

Instructions

(a) What is Zehms’s net income in 2015? Assume a 35% tax rate in all years.

(b) Compute the cumulative effect of the change in accounting principle from weighted-average to FIFO inventory pricing.

(c) Show comparative income statements for Zehms Company, beginning with income before income tax, as presented on the 2015 income statement.

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Year 2013 Weighted-Average $370,000 FIFO $395,000 2014 390,000 420,000 2015 410,000 460,000