Exercise 22-05 E22-5 change in Inventory Method LO 22.2 Fava Company began operations in 2018 and used the LIFO inventory method for both financial reporting and income taxes. At the beginning of 2019, the anticipated cost trends in the industry had changed, so that it adopted the FIFO method for both financial reporting and income taxes. Fava reported revenues of $300,000 and $270,000 in 2019 and 2018, respectively. Fava reported expenses (excluding income tax expense) of $125,000 and $120,000 in 2019 and 2018, which included cost of goods sold of 555,000 and $45,000, respectively. An analysis Indicates that the FIFO cost of goods sold would have been lower by $8,000 in 2018. The tax rate is 219. Pava has a simple capital structure with 15,000 shares of common stock outstanding during 2018 and 2019. It paid no dividends in either year. Required: 1. Prepare the journal entry to reflect the change. 2. At the end of 2019, prepare the comparative income statements for 2019 and 2018. Notes to the financial statements are not necessary 3. At the end of 2019, prepare the comparative retained earnings statements for 2019 and 2018 Page of 3 0 - ZOOM + U mumiy tuge 2. At the end of 2019, prepare the comparative Income statements for 2019 and 2018. Notes to the financial statements are not necessary 3. At the end of 2019. prepare the comparative retained earnings statements for 2019 and 2018 8.000 Inventory Retained Earnings Deferred Tax Liability FIFO COO reduction amount tax rate Comparative Income Statements Given in problem 2019 $ 300,000 2018 As Adjusted $270,000 2019: Given in problem 2018 Aron venn problemlos COGS Revenues Cost of goods sold Other expenses Income before income taxes Income tax expense Net income $ 175,000 $ $ 158,000 124,820 income before income tax income tax rate $ 138.250 2011 Expenseven in problem les coGS for year 2018 enes venin problemlos COGS for year Earings per share L shares shares ven in problem Netcome/ Number of shares Ne Previous ttps://mobap.instructure.com/courses/18772/modules/items/726838