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The Coclin Company has used the LIFO method of accounting for inventory during its first two years of operation, $2022$ and $2023.$ At the beginning of $2024,$ Coclin decided to change to the average cost method for both tax and financial reporting purposes. The following table presents information concerning the change for $20222024.$ The income tax rate for all years is $25\%.$

Income before Income Tax

Using Average Cost Method Using LIFO Method Difference Income Tax Effect Difference after Tax

$2022|$$ $93,600|$ $ $62,400|$ $ $31,200|$$ $7,800|$ $ $23,400$

$2023|48,000|38,400|9,600|2,400|7,200$

Total $|$ $ $141,600|$ $ $100,800|$ $ $40,800|$ $ $10,200|$ $ $30,600$

$2024|$ $ $52,200|$ $ $46,600|$ $ $5,600|$ $ $1,400|$ $ $4,200$

Coclin issued $61,000$ $$1$ par, common shares for $$260,000$ when the business began, and there have been no changes in paid$-$in capital since then. Dividends were not paid the first year, but $$10,000$ cash dividends were paid in both $2023$ and $2024.$

Required:

Prepare the journal entry at January $1,2024,$ to record the change in accounting principle.

Prepare the $20242023$ comparative income statements beginning with income before income taxes.

Prepare the $20242023$ comparative statements of shareholders$$ equity. $[$Hint: The $2022$ statements reported retained earnings of $$46,800.$ This is $$62,400($$$62,400\backslash$times $25\%)].$

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