Below is the net income of Anita Ferreri Instrument Co., a private corporation, computed under the three inventory methods using a periodic system.

	FIFO	Average Cost	LIFO
2017	26,000	24,000	20,000
2018	30,000	25,000	21,000
2019	28,000	27,000	24,000
2020	34,000	30,000	26,000

Instructions

Ignore tax considerations.

(a) Assume that in 2020 Ferreri decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2020, and show net income reported for 2017, 2018, 2019, and 2020.

(b) Assume that in 2020 Ferreri, which had been using the LIFO method since incorporation in 2017, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2020 and show net income reported for 2017, 2018, 2019, and 2020.