Brow Corp. commenced operations on January 1, 2019. The company initially elected to value its inventories using the first-in first-out (FIFO) method. When preparing its 2021 financial statements, Brow decided to switch to the weighted-average cost method to enhance the comparability of its financial statements to those of its competitors. Pertinent information follows: 

■ Brow’s tax rate is 30%. 

■ Brow employs a perpetual inventory system. 

■During 2021, FIFO was initially used to value inventory and determine cost of goods sold. 

■The 2021 draft financial statements were prepared using the FIFO cost flow assumption and include adjusting entries for the preliminary estimate of income tax expense for 2021.

Required: 

a. Prepare the journal entry to retrospectively account for this change in accounting policy. Include the effect of income taxes. 

b. Prepare the journal entry required on December 31, 2021, to adjust Brow Corp.’s accounting records to properly reflect the use of the weighted-average cost method to value inventories during 2021. Include the effect of income taxes.

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December 31, 2019 December 31, 2020 December 31, 2021 FIFO $400,000 650,000 920,000 Weighted average $410,000 620,000 880,000