Jones Corporation switched from the LIFO method of costing inventories to the FIFO method at the beginning of 20X1. The LIFO inventory at the end of 20X0 would have been $80,000 higher using FIFO. Reported retained earnings at the end of 20X0 were $1,750,000. Jones's tax rate is 21%. Tax law requires a company using LIFO for tax purposes to use it for financial reporting as well. So, when Jones changes from LIFO to FIFO, it will have to do the same for tax purposes. Further, Jones must recognize taxable income equal to the amount by which it increases the inventory valuation when it makes the change. As a result, Jones will pay tax on an additional $80,000 of taxable income in 20X1. Required: 1. Calculate the balance in retained earnings at the time of the change (beginning of 20X1) as it would have been reported had FIFO been previously used. 2. Prepare the journal entry to record the change in accounting principle at the beginning of 20X1. Required 1 Required 2 Calculate the balance in retained earnings at the time of the change (beginning of 20X1) as it would have been reported had FIFO been previously used. $ 1,750,000 $ 80,000 Retained earnings balance at January 1, 20X1, using LIFO Increased cumulative pretax income through December 31, 20X0 using FIFO Less: Income tax Increased cumulative net income through December 31, 20X0 Retained earnings balance at January 1, 20X1, using FIFO (24,000) X 56,000 X 1,806,000 X $ Required 1 Required 2 Prepare the journal entry to record the change in accounting principle at the beginning of 20X1. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) No Date General Journal Debit Credit 1 1/1/20X1 Inventory Retained earnings Accrued tax liability