Goddard Company has used the FIFO method of inventory valuation since it began operations in 2018. Goddard decided to change to the average cost method for determining inventory costs at the beginning of 2021. The following schedule shows year-end inventory balances under the FIFO and average cost methods:

Year	FIFO			Average Cost
2018	$	46,600		$	57,200
2019		82,800			72,600
2020		89,400			82,800

Required: 1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method. 2. How much higher or lower would cost of goods sold be in the 2020 revised income statement?

Journal entry worksheet

Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• Record the adjustment necessary to reflect the average cost method.

Note: Enter debits before credits.

Event	General Journal	Debit	Credit
1

How much higher or lower would cost of goods sold be in the 2020 revised income statement?

Cost of goods sold for 2020 would be

lower

in the revised income statement.