Gordon Company started operations on January 1, 2002, and has used the FIFO method of inventory valuation since its inception. In 2008, it decides to switch to the average-cost method. You are provided with the following information.

Instructions
(a) What is the beginning retained earnings balance at January 1, 2004, if Gordon prepares comparative financial statements starting in 2004?
(b) What is the beginning retained earnings balance at January 1, 2007, if Gordon prepares comparative financial statements starting in 2007?
(c) What is the beginning retained earnings balance at January 1, 2008, if Gordon prepares single-period financial statements for 2008?
(d) What is the net income reported by Gordon in the 2007 income statement if it prepares comparative financial statements starting with2005?

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Net Income 2002 2003 2004 2005 2006 2007 Under FIFO $100,000 70,000 90,000 120,000 300,000 305,000 Under Average-Cost $90,000 65,000 80,000 130,000 290,000 310,000 Retained Earnings (Ending balance) Under FIFC $100,000 160,000 235,000 340,000 590,000 780,000