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Armstrong Lid. has used the average cost (AC) method to determine inventory values since the company was first formed in 20x3.In 20x7, the company decided to switch to the FIFO method, to conform to industry practice. Armstrong will still use average cost for tax purposes. The tax rate is 25% The following data have been assembled Net income, as reported, after tax Clowing inventory. AC Closing inventory. YITO Dividendo 20x3 2004 20x5 20x7 $62,000 $7,000 $243,900 $207,700* $140,000 38,900 50.400 63,200 102,700 129,000 45,500 63,900 58,600 94.000 115,600 5.600 7.900 7,900 11,200 15.000 Using the old policy, average cost **Using the new policy, FIFO. Required: Prepare the comparative retained earnings section of the statement of changes in shareholders' equity for 20X7, reflecting the change in accounting policy Required: Prepare the comparative retained earnings section of the statement of changes in shareholders equity for 20X7, reflecting the change in accounting policy 20X6 ARMSTRONG LIMITED Comparative Retained Earnings Statement For the Year Ended 31 December 20X7 20x7 Opening retained earnings, 1 January Cumulative effect of a change in accounting principles Opening retained earnings restated Eamingo Dividends Closing retained earnings 31 December

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