Question

Presented below are income statements prepared on a LIFO and FIFO basis for Bonita Company, which started operations on January 1, 2019. The company presently uses the LIFO method of pricing its inventory and has decided to switch to the FIFO method in 2020. The FIFO income statement is computed in accordance with the requirements of GAAP. Bonita’s profit-sharing agreement with its employees indicates that the company will pay employees 10% of income before profit-sharing. Income taxes are ignored. LIFO Basis FIFO Basis 2020 2019 2020 2019 Sales $3,150 $3,150 $3,150 $3,150 Cost of goods sold 1,160 1,010 1,090 950 Operating expenses 1,040 1,040 1,040 1,040 Income before profit-sharing 950 1,100 1,020 1,160 Profit-sharing expense 95 110 108 110 Net income $855 $990 $912 $1,050 Answer the following questions.

If comparative income statements are prepared, what net income should Bonita report in 2019 and 2020? (Round answers to 0 decimal places, e.g. 125.) 2020 2019 Net income $enter a dollar amount rounded to 0 decimal places $enter a dollar amount rounded to 0 decimal places

Assume that Bonita has a beginning balance of retained earnings at January 1, 2020, of $990 using the LIFO method. The company declared and paid dividends of $510 in 2020. Prepare the retained earnings statement for 2020, assuming that Bonita has switched to the FIFO method. (Round answers to 0 decimal places, e.g. 125.) BONITA COMPANY Retained Earnings Statement select an opening name Cumulative Effect of Change to FIFODividendsNet IncomeRetained Earnings, January 1, as adjustedRetained Earnings, January 1, as reportedRetained Earnings, December 31 $enter a dollar amount select an item Cumulative Effect of Change to FIFODividendsNet IncomeRetained Earnings, January 1, as adjustedRetained Earnings, January 1, as reportedRetained Earnings, December 31 enter a dollar amount select a summarizing line for the first part Cumulative Effect of Change to FIFODividendsNet IncomeRetained Earnings, January 1, as adjustedRetained Earnings, January 1, as reportedRetained Earnings, December 31 enter a total amount for the first part select between addition and deduction AddLess : select an item Cumulative Effect of Change to FIFODividendsNet IncomeRetained Earnings, January 1, as adjustedRetained Earnings, January 1, as reportedRetained Earnings, December 31 enter a dollar amount select between addition and deduction AddLess : select an item Cumulative Effect of Change to FIFODividendsNet IncomeRetained Earnings, January 1, as adjustedRetained Earnings, January 1, as reportedRetained Earnings, December 31 enter a dollar amount select a closing name Cumulative Effect of Change to FIFODividendsNet IncomeRetained Earnings, January 1, as adjustedRetained Earnings, January 1, as reportedRetained Earnings, December 31 $enter a total amount

Answer 1