Presented below are income statements prepared on a LIFO and FIFO
basis for Teal Company, which started operations on January 1, 2016. The company presently uses the LIFO method of pricing its inventory and has decided to switch to the FIFO method in 2017. The FIFO income statement is computed in accordance with the requirements of GAAP. Teal's profit-sharing agreement with its employees indicates that the company will pay employees 10% of income before profit-sharing. Income taxes are ignored.
Assume that Teal has a beginning balance of retained earnings at January 1, 2017, of $873 using the LIFO method. The company declared and paid dividends of $480 in 2017. Prepare the retained earnings statement for 2017, assuming that Teal has switched to the FIFO method.
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