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Exercise $20-7($Algo$)$ Change in principle; Change in inventory cost method $[$LO$20-2]$

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 $1,2024,$ 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 $25\%.$

Required:

Prepare the journal entry to record the change in accounting principle.

Determine the net income to be reported in the $2024-2023$ comparative income statements.

Indicate the affect of the change in the $2024-2023$ comparative statements of shareholders' equity assuming cash dividends were

$$9\mathrm{.}00$ million each year and that no dividends were paid prior to $2023.$

Complete this question by entering your answers in the tabs below.

Prepare the journal entry to record the change in accounting principle.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Enter your answers in

millions rounded to $2$ decimal places $($i$.$e$.,5,500,000$ should be entered as $5\mathrm{.}50).$

Journal entry worksheet

$1$

Record the change in accounting principle.

Note: Enter debits before credits.

Complete this question by entering your answers in the tabs below.

Required $1,$ Required $2$

Determine the net income to be reported in the $2024-2023$ comparative income statements.

Note: Do not round intermediate calculations. Enter your answers in millions rounded to $2$ decimal places $($i$.$e$.,5,500,000$

should be entered as $5\mathrm{.}50).$

Indicate the affect of the change in the $2024-2023$ comparative statements of shareholders' equity assuming cash dividends

were $$9$ million each year and that no dividends were paid prior to $2023.$

Note: Do not round intermediate calculations. Enter your answers in millions rounded to $2$ decimal places $($i$.$e$.,5,500,000$

should be entered as $5\mathrm{.}50).$

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