Heinz Company began operations on January 1, 2020, and uses the FIFO method in costing its inventory. At the beginning of 2022, management is contemplating a change to the LIFO method and is interested in determining what effect such a change will have on net income. Accordingly, the following information has been developed:

Final Inventory					2020	2021
FIFO					640,000	712,000
LIFO					560,000	636,000
Net Income (computed under the FIFO method)					980,000	1,330,000

Assuming that the company decides to make the change in accounting principle and issues comparative statements of retained earnings for 2022, the adjustment to the beginning balance of Retained Earnings would be

Select one:

a decrease of $80,000 to the January 1, 2021 balance.

a decrease of $156,000 to the January 1, 2022 balance.

an increase of $80,000 to the January 1, 2021 balance.

an increase of $156,000 to the January 1, 2022 balance.