Chapter 22 Homework Question 2 of 8 < > 0.18/1 Skysong Inc. began operations on January 1, 2018, and uses the FIFO method of pricing inventory. Management is contemplating a change in inventory methods for 2021 The following information s available for the years 2018-2020: Net Income Computed Using FIFO Method Average-Cost Method LIFO Method 2018 $101,000 $123,000 $81,000 2019 73,000 84,000 51,000 2020 143,000 166,000 132,000 (a) Prepare the journal entry necessary to record a change from the FIFO method to the average cost method in 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Inventory Retained Earnings Debit Credit 56000 56000 Chapter 22 Homework Question 2 of 8 < > 0.18/1 (a) Prepare the journal entry necessary to record a change from the FIFO method to the average cost method in 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Inventory Retained Earnings Debit 56000 Credit 56000 (b) Determine net income to be reported for 2018, 2019, and 2020, after giving effect to the change in accounting principle. 2018 2019 Net Income 123000 84000 2020 166000 Chapter 22 Homework Question 2 of 8 < > 2020 $ 166000 0.18/1 (c) Assume Skysong Inc. used the average cost method instead of the FIFO method during the years 2018-2020. In 2021, Skysong changed to the LIFO method. Assume Skysong deems the determination of the change to LIFO to be impractical. Prepare the journal entry necessary to record the change in principle. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Inventory Retained Earnings eTextbook and Media List of Accounts Debit 109000 Credit 109000