Recording Entry and Determining Effect on Reporting for Change in Accounting Principle Sterling Co. changed from average cost to FIFO 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 $6,000 $ 4,000 Ending inventory, FIFO 3,600 2,800 a. Prepare the entry in the company's accounting system on January 1, 2021, to record the accounting change. Ignore taxes Date Account Name Dr. Cr. Jan. 1, 2021 Inventory * * 2,400 0 Retained Earnings 0 2,400 b. For external reporting purposes on December 31, 2021, the company reports comparative balance sheets for 2021 and 2020. What amount of inventory is reported on the December 31, 2020, balance sheet? Balance Sheet, Dec. 31 2020 Assets Inventory $ 3,600 C. What cumulative effect of change in accounting principle is reported as an adjustment to retained earnings in 2021? in 2020? Assume comparative financial statement presentation of years ended December 31, 2021, and 2020. Ignore taxes. Note: Indicate a decrease with a negative sign. Cumulative effect of change in accounting principle reported in beginning retained earnings in 2020: $ Cumulative effect of change in accounting principle reported in beginning retained earnings in 2021: 1,200 x 2,400 x