The management of Kreiter Instrument Company had concluded, with the concurrence of its independent auditors, that results of operations would be more fairly presented if Kreiter changed its method of pricing inventory from last-in, first-out (LIFO) to average-cost in 2008. Given below is the 5-year summary of income under LIFO and a schedule of what the inventories would be if stated on the average-cost method.

Instructions
Prepare comparative statements for the 5 years, assuming that Kreiter changed its method of inventory pricing to average-cost. Indicate the effects on net income and earnings per share for the years involved. Kreiter Instruments started business in 2003. (All amounts except EPS are rounded up to the nearest dollar.)

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Kreiter Instrument Company Statement of Income and Retained Earnings For the Years Ended May 31 2006 2008 $13,964 $15,506 $16,673 $18,221 $18,898 Cost of goods sold Beginning inventory 1,000 13,000 1,000 15,000 1,237 17,100 1,100 13,900 (1,000) 14,000 1,506 763 743 1,115 15,900 Ending inventory Total 14,885 1,788 832 956 478 478 1,759 $2,237 12,900 15,778 16,968 Gross profit Administrative expenses Income before taxes Income taxes (50%) Net income Retained earnings-beginning 1,064 2,443 1,930 1,536 768 182 182 1,206 $1,388 $1.82 941 471 470 3,005 $3,475 371 1,388 $ 1,759 2,237 S 3,005 $7.68 Earnings per share Schedule of Inventory Balances Using Average-Cost Method For the Years Ended May 31 2004 2007 $950 $1,124 $1,091 $1,270 $1,480 $1,699