Question: In 2021, Company switched its inventory method from average cost to FIFO. Inventories at the end of 2020 were reported in the balance sheet at

In 2021, Company switched its inventory method from average cost to FIFO. Inventories at the end of 2020 were reported in the balance sheet at $55 million. If the FIFO method had been used, 2020 ending inventory would have been $50 million. Ignoring the effect of income taxes, the adjustment to 2021s beginning retained earnings would be: a. $0 b. $50 million increase c. $5 million increase d. $5 million decrease. Please Explain answer

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