Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2018 decided to change to the FIFO method. The inventory as reported at the end of 2017 using LIFO would have been $22 million higher using FIFO. Retained earnings reported at the end of 2016 and 2017 was $242 million and $262 million, respectively (reflecting the LIFO method). Those amounts reflecting the FIFO method would have been $252 million and $274 million, respectively. 2017 net income reported at the end of 2017 was $30 million (LIFO method) but would have been $32 million using FIFO. After changing to FIFO, 2018 net income was $38 million. Dividends of $7 million were paid each year. The tax rate is 40%.

Required: 1. Prepare the journal entry at the beginning of 2018 to record the change in accounting principle.

Event	General Journal	Debit	Credit
1

2. In the 20182017 comparative income statements, what will be the amounts of net income reported for 2017 and 2018?

	2017	2018
	($ in millions)
Net income

3. Prepare the 20182017 retained earnings column of the comparative statements of shareholders equity.

FANTASY FASHIONS
Statement of Shareholders Equity
For the Years Ended Dec. 31, 2018 and 2017
	Common Stock	Additional Paid-in Capital	Retained Earnings	Total Shareholders Equity
			($ in millions)
Balance at Jan. 1, 2017
Net income
Cash dividends
Balance at Dec. 31, 2017			$0
Net income
Cash dividends
Balance at Dec. 31, 2018			$0