Exercise 22-2

Ivanhoe Company began operations on January 1, 2015, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2018. The following information is available for the years 20152017.

		Net Income Computed Using
		Average-Cost Method		FIFO Method		LIFO Method
2015		$15,980		$19,140		$12,070
2016		18,090		21,090		14,040
2017		20,130		24,990		16,940

(a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2018.