In 2020, Frost Company, which began operations in 2018, decided to change from LIFO to FIFO because management believed that FIFO better represented the flow of their inventory. Management prepared the following analysis showing the effect of this change:

Ending Inventory

LIFO

FIFO

Cumulative Difference

12/31/2018

$239,000

$273,500

$34,500

12/31/2019

243,000

303,000

60,000

12/31/2020

254,300

323,500

69,200

Frost reported net income of $2,418,500, $2,320,500, and $1,997,000 in 2018, 2019, and 2020, respectively. The tax rate is 30%.

Required:

1.	Prepare the journal entry necessary to record the change.
2.	What amount of net income would Frost report in 2018, 2019, and 2020?

2. What amount of net income would Frost report in 2018, 2019, and 2020 after the change and restatement?

	2018	2019	2020
Net income under FIFO