During 2022 (its first year of operations) and 2023, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2024, Fieri decided to change to the average method for both financial reporting and tax purposes. Income components before income tax for 2022, 2023, and 2024 were as follows:

Dividends of $20 million were paid each year. Fieri’s fiscal year ends December 31.

Required:
1. Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. (Ignore income taxes.)
2. Prepare the 2024–2023 comparative income statements.
3. Determine the balance in retained earnings at January 1, 2023, as Fieri reported previously using the FIFO method.
4. Determine the adjustment to the January 1, 2023, balance in retained earnings that Fieri would include in the 2024–2023 comparative statements of retained earnings or retained earnings column of the statements of shareholders’ equity to revise it to the amount it would have been if Fieri had used the average method.

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($ in millions) Revenues Cost of goods sold (FIFO) Cost of goods sold (average) Operating expenses 2022 $380 (38) (52) (242) 2023 $ 390 (40) (56) (250) 2024 $ 420 (46) (62) (254)