Question: Recording Entry and Determining Effect on Net Income for Change in Accounting Principle Sterling Co. changed from FIFO to average cost on January 1, 2021.

Recording Entry and Determining Effect on Net Income for Change in Accounting Principle Sterling Co. changed from FIFO to average cost on January 1, 2021. Inventory balances under both methods follow. Sterling Co. has a December 31 year-end. Inventory balances, Dec. 31 2020 2019 Ending inventory, average cost $33,000 $22.000 Ending Inventory, FIFO 19.800 15,400 a. Prepare the entry on January 1, 2021, to record the accounting change. Ignore taxes. Date Account Name Dr. Jan. 1.2021 0 0 b. Show how its 2020 income statement is impacted when retroactively adjusted for the change in accounting principle. Ignore taxes. Net income will Check

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