Millington Materials is a leading supplier of building equipment, building products,materials & timber for sale, with over 200 branches across the Mid-South. On January 1, 2016, management decided to change from the LIFO 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 40%.

Income before Income Tax

	FIFO	LIFO	Diffrence
Before 2015	$15 million	8million	$7 million
2015	8 million	5 million	3 million
2016	10 million	9 million	1 million

Required:

1.

Prepare the journal entry to record the change in accounting principle. (All tax effects should be reflected in the deferred tax liability account.)

2.

Determine the net income to be reported in the 20162015 comparative income statements. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).

3.

Which other 2015 amounts would be reported differently in the 20162015 comparative income statements and 20162015 comparative balance sheets than they were reported the previous year? (Select all that apply.)

a) Earnings per share, b) Cost of goods sod, c) Income tax expense (and income before income tax)

d) Inventory (and total assets), e) Deferred tax liability (and total liabilities), f) Retained earnings (and total shareholder's equity)

4.

Compute the balance of retained earnings on Jan. 1, 2015, Dec. 31, 2015 and Dec. 31, 2016. Cash dividends were $1 million each year. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

Millington Supplies

Statement of Shareholder's Equity

For the Years Ended Dec. 31, 2016 and 2015

($ in millions)

	Common Stock	Additional Paid-in Capital	Retained EArnings	Total Shareholder's Equity
Balance Jan. 1, 2015
Balance at Dec. 31, 2015
Balance at Dec. 31, 2016

Please provide with calculate and explain.

Thanks,