Exercise 20-7 (Algo) Change in principle; Change in inventory cost method [LO20-2] Millington Materials is a leading supplier of building equipment, building products, materials, and timber for sale, with over 200 branches across the Mid-South. On January 1, 2021, management decided to change from the average inventory costing method to the FIFO inventory costing method at each of its outlets. The following table presents information concerning the change. The income tax rate for all years is 25%. Income before Income Tax Average FIFO Cost Difference Before$ 16 million$ 9 million $7 million 2020 2020 10 million 6 million 4 million 2021 11 million 10 million 1 million Required: 1. Prepare the journal entry to record the change in accounting principle. 2. Determine the net income to be reported in the 2021-2020 comparative income statements. 4. Indicate the affect of the change in the 2021-2020 comparative statements of shareholders' equity assuming cash dividends were $2.50 million each year and that no dividends were paid prior to 2020. X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required Required Required 1 2 4 Prepare the journal entry to record the change in accounting principle. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Show less No Event General Journal Debit Credit 1 1 Inventory 11.0 Income tax payable 2.8 Retained earnings 8.3 X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required Required Required 1 2 4. Determine the net income to be reported in the 2021-2020 comparative income statements. (Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Show less 2021 2020 ($ in millions) Net Income $ 8.3 $ 7.5 X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required Required Required 2 4 Indicate the affect of the change in the 2021-2020 comparative statements of shareholders' equity assuming cash dividends were $2.5 million each year and that no dividends were paid prior to 2020. (Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Show less MILLINGTON SUPPLIES Statement of Shareholders' Equity For the Years Ended Dec. 31, 2021 and 2020 Additional Total ($ in millions) Common Paid-in Retained Shareholders' Stock Capital Earnings Equity Balance at Jan. 1, $ 6.&X 2020 Balance at Dec. 31, $ 4.1 2020 Balance at Dec. 31, $ 7.5 2021