5. At the beginning of January 2018, Karen Company decided to change from FIFO method to weighted average inventory valuation method. Balances of inventory under each method are as follows:

FIFO Weighted Average

December 31, 2016 Php 1,000,000 Php 900,000

December 31, 2017 Php 1,200,000 Php 1,350,000

December 31, 2018 Php 1,320,000 Php 1,200,000

Required: Prepare all the necessary journal entries and compute for the amount that Karen Company should report as the effect of this accounting change in its 2018 statement of retained earnings.

PLEASE EXPLAIN WITH SOLUTION AND JOURNAL ENTRY