The Camellion Corporation used the weighted average inventory costing method. At the beginning of 2022, Camellion decided to change to the FIFO method. Camellion has paid dividends of $37 million each year beginning in 2015. Retained earnings on January 1, 2020, were $550 million and inventory was $400 million.

Required: 

1. Prepare the journal entry at the beginning of 2020, 2021 and at the end of 2022 to record the change in policy. 

2. Prepare the 2021-2022 comparative statements of profit or loss.

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Income components for 2022 and prior years are as follows: 2021 $ (in million) 2022 2020 Previous years Cost of goods sold (Weighted Average) Cost of goods sold (FIFO) $320 $300 $400 $1.500 330 295 270 Difference 30 1,200 200 70 25 $810 $740 Revenues S800 S3275 Operating expenses $225 $215 $190 $900 Income components for 2022 and prior years are as follows: 2021 $ (in million) 2022 2020 Previous years Cost of goods sold (Weighted Average) Cost of goods sold (FIFO) $320 $300 $400 $1.500 330 295 270 Difference 30 1,200 200 70 25 $810 $740 Revenues S800 S3275 Operating expenses $225 $215 $190 $900