In 2011, Compliance Industries changed its method of inventory valuation. The summary effect of those changes is as follows:

Net income was $128,000, $119,000, and $98,000 for 2011, 2010, and 2009, respectively. The income tax rate is 30%.
1. Compute the reported net income for each year if three years of financial statements are issued at the end of 2011.
2. Compute the amount of adjustment that would be made to Retained Earnings as of January 1,2009.

Old Method New Method Cost of goods sold-2011 Cost of goods sold-2010 Cost of goods sold-2009 Cost of goods sold-2008 and before $25,000 29,000 31,000 51,000 $19,000 21,000 24,000 38,000