Sumner Stores began operations on January 1, 2014, and adopted the average-cost method of accounting. In 2017, it is considering a change to the FIFO basis.
Sumner provided the following information to assist in deciding whether to change inventory valuation techniques.
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Sumner Stores reported the following income statement information:
a. Prepare the income statements under both methods for the years ended December 31, 2014. through December 31, 2016.
b. Assume that Sumner Stores changes to the FIFO basis effective January 1, 2017. Prepare the comparative income statements for the 3 years ended December 31, 2017.
c. Prepare the retained earnings column of the statement of stockholders’ equity for the year ended December 31, 2017, assuming that Sumner does not present comparative statements. Sumner does not declare dividends in 2014-2017.