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Presented below are income statements prepared on a LIFO and FIFO basis for Marigold 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. Marigold’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 2017 2016 2017 2016 $3,010 $3,010 $3,010 980 $3,010 1,060 980 1,150 980 950 980 980 Sales Cost of goods(c) Assume that Marigold has a beginning balance of retained earnings at January 1, 2017, of $945 using the LIFO method. The

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Answer #1

Retained Earnings Statement for the year ending Dec 31, 2017

Retained Earnings : January 1, 2017. $945

Add: Net income for the year ending 2017. $870

Less: Dividend paid to shareholders. $490

Retained Earnings at Dec 31, 2017. $1325

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