Jones Corporation switched from the LIFO method of costing inventories to the FIFO method at the beginning of 2014. The LIFO inventory at the end of 2013 would have been $80,000 higher using FIFO. Reported retained earnings at the end of 2013 were $1,750,000. Jones’s tax rate is 30%.

Required:

1. Calculate the balance in retained earnings at the time of the change (beginning of 2014) as it would have been reported had FIFO been previously used.

2. Prepare the journal entry to record the change in accounting principle at the beginning of 2014.