Hello. Can you please help me with this. Can you also put the journal entries into a chart or excel so that I can see how it should be formatted. Thanks so much.C$7-38.$ Analyzing Effects of Change from L$.$IFO to FIFO Inventory Costing

Virco Manufacturing Corp. provided the following note in its annual report for the year ended

January $31,2011$:

On January $31,2011,$ the Company elected to change its costing method for the material component of

raw materials, work in process, and finished goods irventory to the lower of cost or market using the first$-$in

first$-$out $("$FIFO$\text{'})$ method, from the lower of cost or market using the last$-$in first out $("$FO$")$ method. The

labor and overhead components of inventory have historically been valued on a FIFO basis. The Company

believes that the FIFO method for the material component of inventory is preferable as it conforms the

inventory costing methods for all components of irventory into a single costing method and betler reflects

current acquisition costs of those inventories on our consolidated balance sheets. Additionally, presenta$-$

tion of inventory at FIFO aligns the financial reporting with the Company's borrowing base under its line

of credit $($see Note $3$ for further discussion of the line of credit$).$ Further, this change will promote greater

comparability with companies that have adopted International Financial Reporting Standards, which does

not recognize UFO as an acceptable accounting method. In accordance with FASB ASC Topic $250,\text{'}$AC$-$

counting Changes and Error Corrections," al prior periods presented have been adjusted to apply the new

accounting method retrospectively. In addition, as an indirect effect of the change in our inventory costing

method from LIFO to FIFO, the Company recorded additional inventory lower of cost or market expenses

and changes in deferred tax assets and income tax expense. The retroactive effect of the change in our

inventory costing method...increased the February $1,2008,$ opening retained earnings balance by $$4\mathrm{.}1$

milion, and increased our inventory and retained earnings balances by $$8\mathrm{.}5$ million and $$5\mathrm{.}4$ million as of

January $31,2009,$ by $$6\mathrm{.}9$ million and $$4\mathrm{.}3$ milion as of January $31,2010,$ and by $$7\mathrm{.}6$ million and $$4\mathrm{.}7$

milion as of January $31,2011,$ respectively.

REQUIRED

a$.$ What do the stated changes in inventory in each year represent $($e$.$g$.,$ the $$7\mathrm{.}6$ million in $2011)?$

Equity? What is the difference between the two?

b$.$ What were Virco's stated reasons for the change to FIFO?

c$.$ In the Annual Report for the year ended January $2010,$ Virco states the following: "Inventories

are stated at the lower of cost or market. Cost is determined using the last$-$in$,$ first$-$out $("$LIFO$")$

method of valuation for the material content of inventories and the first$-$in$,$ first$-$out $("$FIFO$")$

method for labor and overhead. The Company uses LIFO as it results in a better matching of

costs and revenues." What are some possible motivations behind why Virco changed to the

FIFO method of accounting beyond those listed by management?