Blago Wholesale Company began operations on January 1, 20X1, and uses the average cost method in costing its inventory. Management is contemplating a change to the FIFO method in 20X2 and is interested in determining how such a change will affect net income. Accordingly, the following information has been developed:

Condensed income statements for Blago Wholesale appear below:

Required:

Based on this information, what would 20X2 net income be after the change to the FIFO method? Ignore any income tax effects of this change in accounting method.

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20X1 20X2 Final inventory: Average cost FIFO $150,000 160,000 $255,000 270,000