Business, 29.05.2021 15:30 Elijah7934

Millington Materials is a leading supplier of building equipment, building products, materials, and timber for sale, with over 200 branches across the Mid-South. On January 1, 2021, management decided to change from the average inventory costing method to the FIFO inventory costing method at each of its outlets. The following table presents information concerning the change. The income tax rate for all years is 40%. Income before Income Tax
FIFO Average Cost Difference
Before 2015 $35 million $28 million $7 million
2015 48 million 25 million 23 million
2016 30 million 29 million 1 million

Requied:
a. Prepare the journal entry to record the change in accounting principle.
b. Determine the net income to be reported in the 2016–2015 comparative income statements.

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