Instructions At the beginning of 2017, Brett Company decided to change from the FIFO to the average cost inventory cost flow assumption for financial reporting purposes. The following data are available in regard to its pretax operating income and cost of goods sold: Adjusted Reported Excess of Income Average Cost of Goods Sold Income Before Over Before Year Income Taxes Income Taxes FIFO Cost of Goods Sold $1,600,000 $1,470,000 Prior to 2016 $130,000 2016 600,000 50,000 550,000 2017 700,000 The income tax rate is 30%, and the company received permission from the IRS to also make the changee for income tax purposes. Brett has a simple capital structure, with 100,000 shares of common stock outstanding. Brett computed its reported income before income taxes in 2017 using the newly adopted inventory cost flow method. Brett's 2016 and 2017 revenues were $1,500,000 and $1,750,000, respectively. Its retained earnings balances at the beginning of 2016 and 2017 (unadjusted) were $1,120,000 and S1,540,000, respectively. Brett paid no dividends in any year Required: 1. Prepare the journal entry at the beginning of 2017 to reflect the change 2. At the end of 2017, prepare comparative income statements for 2017 and 2016. Notes to the financial statements are not necessary. 3. At the end of 2017. prepare comparative retained earninas statements for 2017 and 2016