Question: In 2011, CPS Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2010, CPS's inventories

In 2011, CPS Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2010, CPS's inventories were $32 million (FIFO). CPS's records indicated that the inventories would have totaled $23.8 million at December 31, 2010, if determined on an average cost basis.

Required:
1. Prepare the journal entry to record the adjustment. (Ignore income taxes.)
2. Briefly describe other steps CPS should take to report the change.

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