In 2021, CPS Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 2020, CPS’s inventories were $32 million (FIFO). CPS’s records indicated that the inventories would have totaled $23.8 million at December 31, 2020, if determined on an average cost basis.

Required:
1. Prepare the journal entry to record the adjustment.
2. Briefly describe other steps CPS should take to report the change.