Question: Presented below are income statements prepared on a LIFO and FIFO basis for Splish 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. Splish's profit-sharing agreement with its employees indicates that the company will pay employees 10% of income before profit-sharing. Income taxes are ignored.
If comparative income statements are prepared, what net income should Splish report in 2016 and 2017?
Net Income 2017
Net Income 2016
|
LIFO BASIS |
LIFO BASIS |
FIFO BASIS |
FIFO BASIS |
|
2017 |
2016 |
2017 |
2016 |
| SALES |
$3,010 |
$3,010 |
$3,010 |
$3,010 |
| COST OF GOODS |
$1,190 |
$1,040 |
$1,050 |
$930 |
| OPERATING EXPENSES |
$1,050 |
$1,050 |
$1,050 |
$1,050 |
| Income before profit sharing |
$770 |
$920 |
$910 |
$1,030 |
| Profit sharing Expense |
$77 |
$92 |
$102 |
$92 |
| Net Income |
693 |
828 |
808 |
938 |