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6 The Pyramid Company has used the LIFO method of accounting for inventory during its first two years of operation, 2019 and 2020. At the beginning of 2021. Pyramid decided to change to the average cost method for both tax and financial reporting purposes. The following table presents information concerning the change for 2019-2021. The income tax rate for all years is 25%. Inco before Income Tax thing Averas Using LED Income Difference Coit Method Method Difference Tax Effect after Tax $ 95,00 $ 62,400 $31,200 $ 7,500 $23,400 2000 48.000 38,400 9,600 2,400 7,200 Total 5141,600 $100,00 $40,800 $10,200 $30,600 2021 $ 46,600 $ 5,600 $ 1,400 $ 4,200 2019 Pyramid Issued 61,000 $1 par, common shares for $260,000 when the business began, and there have been no changes in paid-in capital since then. Dividends were not paid the first year, but $10,000 cash dividends were paid in both 2020 and 2021. Required: 1. Prepare the journal entry at January 1, 2021, to record the change in accounting principle 2. Prepare the 2021-2020 comparative Income statements beginning with income before income taxes 3. Prepare the 2021-2020 comparative statements of shareholders' equity. (Hint: The 2019 statements reported retained earnings of $46.800. This is $62.400 - ($62.400 x 259)). Complete this question by entering your answers in the tabs below. Required i Required 2 Required 3 Prepare the journal entry at January 1, 2021, to record the change in accounting principle. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) NO Date General Journal Debit Credit 1 40,800 January 01, 2021 Inventory Income tax payable Retained earnings 10.200 30 600 Regu Required 2 > Answer is not complete. 0.5 points Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare the 2021-2020 comparative Income statements beginning with income before income taxes. (Round EPS answers to 2 decimal places.) COMPARATIVE INCOME STATEMENTS 2021 Income before income taxes OS 52 2003 Income tax expense 13 050 Net income s 39.150 S Earnings per share $ 0.64 $ 2020 48,000 12,000 36.000 0.59 % Answer is not complete. Complete this question by entering your answers in the tabs below. Tits Required 1 Required 2 Required 3 Prepare the 2021-2020 comparative statements of shareholders' equity. (Hint: The 2019 statements reported retained earnings of $46,800. This is $62.400 - ($62,400 x 25%).) (Deductions should be indicated by a minus sign.) PYRAMID COMPANY Statement of Shareholders' Equity For the Years Ended Dec 31, 2021 and 2020 Additional Common Pald-in Retained Stock Capital Earnings 5 61,000 $ 199,000 $ 46,800 X 0 0 Total Shareholders Equity OOS Balance at Jan 1, 2020 Not income Cash dividends Balance at Dec 31, 2020 Net income Cash dividends Balance at Dec 31 2021 S Is 46.800 s 0 $ 0 0 61,000 $ 199,000 os 0 S 0 61 000 S 199,000 O un on $ 46800 $ 0