Winthur Stores began operations on January 1, 2012, and adopted the FIFO method of accounting for its inventory for book and tax purposes. In 2015, it is considering a change to the average- cost method basis for book purposes only. Winthur provided the following informa-tion to assist in deciding whether to change inventory valuation techniques.

Winthur 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 Winthur Stores changes to the average- cost method 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 Winthur does not present comparative statements. Winthur does not declare dividends in 2012€“2015.

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Ending Inventory Cost of Sales Retained Earnings Average Cost Year Ended 12/31/2012 $12,000 $10,000 $74,000 76,000 24,600 $23,400 1231/2013 19,500 16,000 78,500 2,000 51,600 48,300 12/31/2014 28,000 24,000 91.000 95,000 78,000 72,300 12/31/2015 35,600 32,000 90,000 108,000 111600 95,100 Average Average Cost AFO FFO AFO 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 $40,000 $36,500 $30,000 40% 40% 40% 40%