Shannon, Inc., changed from the LIFO cost flow assumption to the FIFO cost flow assumption in 2010.

Question:

Shannon, Inc., changed from the LIFO cost flow assumption to the FIFO cost flow assumption in 2010. The increase in the prior year’s income before taxes is $1,200,000. The tax rate is 40%. Prepare Shannon’s 2010 journal entry to record the change in accounting principle.