Royal Inc. began operations on January 1, 2009, and uses the FIFO method of pricing inventory. Management is contemplating a change in inventory methods for 2015. The following information is available for the years 2012€“2014.

Instructions
(a) Prepare the journal entry necessary to record a change from the FIFO method to the average cost method in 2015.
(b) Determine net income to be reported for 2012, 2013, and 2014, after giving effect to the change in accounting principle.
(c) Assume Royal Inc. used the average cost method instead of the FIFO method during the years 2012€“2014. In 2015, Royal changed to the LIFO method. Prepare the journal entry necessary to record the change inprinciple.

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Net Income Computed Using Average-Cost Method $105,000 70,000 150,000 FIFO Method LIFO Method 2012 2013 2014 $120,000 80,000 165,000 $80,000 50,000 130,000