Sumner Stores began operations on January 1, 2014, and adopted the average-cost method of accounting. In 2017, it is considering a change to the FIFO basis.

Sumner provided the following information to assist in deciding ?whether to change inventory valuation techniques.

Sumner Stores reported the following income statement information:

Required

a. Prepare the income statements under both methods for the years ended December 31, 2014. through December 31, 2016.

b. Assume that Sumner Stores changes to the FIFO basis effective January 1, 2017. Prepare the comparative income statements for the 3 years ended December 31, 2017.

c. Prepare the retained earnings column of the statement of stockholders' equity for the year ended December 31, 2017, assuming that Sumner does not present comparative statements. Sumner does not declare dividends in 2014-2017.

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Cost of Sales Ending Inventory Retained Eamings Average Average Average Year Ended 12/31/2014 12/31/2015 Cost FIFO Cost FIFO FIFO Cost $ 12,000 19,500 28,000 35,600 $76,000 $74,000 $23,400 48.300 $24,600 $10,000 16,000 82.000 78,500 51,600 12/31/2016 12/31/2017 72,300 78,000 111.600 24.000 95,000 91,000 108,000 32.000 90,000 95,100 2017 $200 000 $ 54000 Account 2016 2015 2014 Sales revenue $175 000 $160,000 $145 000 Sell ng. general, and admin strative expenses Income tax rate $ 36,500 $ 30,000 $ 40,000 40% 40% 40% 40%