Brockton Ltd. began applying IFRS in 20X8. One of the necessary adjustments was to adjust past inventory records to remove warehousing expenses from the balances of the ending inventories for 20X5, 20X6, and 20X7, and restate earnings. The pre-adjustment inventory balances and the warehousing costs contained therein were as follows:

Year	Balance, 31 December				Warehousing Costs
20X7	$	770,000			$	34,000
20X6		700,000				18,000
20X5		740,000				23,000

Required: 1. Show the impact this change will have on the companys earnings. Assume an income tax rate of 20%.

2. Prepare the adjusting entry (entries) that Brockton will need to make on its books in 20X8 to reflect the above information. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)