Sumner Stores began operations on January 1, 2012, and adopted the average-cost method of accounting. In 2015, 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, 2012, through December 31, 2014.
b. Assume that Sumner Stores changes to the FIFO basis effective January 1, 2015. Prepare the comparative income statements for the three years ended December 31, 2015.
c. Prepare the retained earnings column of the statement of stockholders€™ equity for the year ended December 31, 2015, assuming that Sumner does not present comparative statements. Sumner does not declare dividends in 2012€“2015. .

Ending Inventory Cost of Sales Retained Earnings Year Ended 12/31/2012 $10,000 $12,000 76,000 $74,000 $23,400 $24,600 12/31/2013 16,000 9,500 82,000 7,500 48,300 51,600 12/31/2014 24.000 28,000 95,000 91,000 72,300 78,000 12/31/2015 32,000 35,600 108,000 90,000 95,100 111,600 Average Average Cost Average Cost Cost FIFO AFO FIFO Account Sales revenue Selling, general, and administrative expenses Income tax rate 2015 2014 2013 2012 $200,000 175,000 $160,000 $145,000 $54,000 40% S40,000 40% $36,500 40% $30,000 40%