Chavez Wholesale Inc. changed its method of valuing inventory from the average cost

method to the FIFO cost method at the beginning of 20x9. At December 31, 20x8,

inventories were $230,000 (average cost basis). They were $238,000 a year earlier.

Chavez Wholesale's accountants determined that the inventories would have totaled

$286,000 at December 31, 20x8, and $275,000 at December 31, 20x7, if determined on a

FIFO basis. A tax rate of 30% is in effect for all years.

Pretax income was $1,100,000 in 20x8.

Required

(a) Prepare the journal entry to record the change in policy.

(b) What is the restated net income for the years ending December 31, 20x8.