Income before Income Tax

FIFO

Average Cost

Difference

Before 2023

$ 18

million

$ 11

million

$ 7

million

2023

14

million

8

million

6

million

2024

13

million

12

million

1

million

Required:

4.Indicate the affect of the change in the 2024-2023 comparative statements of shareholders' equity assuming cash dividends were $3.50 million each year and that no dividends were paid prior to 2023.

Millington Materials is a leading supplier of building equipment, building products, materials, and timber for sale, with over 200 branches across the Mid-South. On January 1, 2024, management decided to change from the average inventory costing method to the FIFO inventory costing method at each of its outlets. The following table presents information concerning the change. The income tax rate for all years is 25%. Income before Income Tax Average Cost $11 million FIFO Before 2023 2023 $ 18 million 14 million 13 million 12 million 2024 8 million Difference $7 million 6 million 1 million