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, 2021, 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%

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, 2021, 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
	FIFO			Average Cost			Difference
Before 2020	$	46	million	$	24	million	$	22	million
2020		32	million		18	million		14	million
2021		36	million		26	million		10	million

Required: 1. Prepare the journal entry to record the change in accounting principle. 2. Determine the net income to be reported in the 20212020 comparative income statements. 4. Indicate the affect of the change in the 20212020 comparative statements of shareholders equity assuming cash dividends were $4.00 million each year and that no dividends were paid prior to 2020.

Prepare the journal entry 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. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Journal entry worksheet

Record the change in accounting principle.

Note: Enter debits before credits.

Event	General Journal	Debit	Credit
1

Complete this question by entering your answers in the tabs below.

Required 1

Required 2

Required 4

Determine the net income to be reported in the 20212020 comparative income statements. (Do not round intermediate calculations. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

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, 2021, 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
	FIFO			Average Cost			Difference
Before 2020	$	46	million	$	24	million	$	22	million
2020		32	million		18	million		14	million
2021		36	million		26	million		10	million

Required: 1. Prepare the journal entry to record the change in accounting principle. 2. Determine the net income to be reported in the 20212020 comparative income statements. 4. Indicate the affect of the change in the 20212020 comparative statements of shareholders equity assuming cash dividends were $4.00 million each year and that no dividends were paid prior to 2020.

Required: 1. Prepare the journal entry to record the change in accounting principle. 2. Determine the net income to be reported in the 20212020 comparative income statements. 4. Indicate the affect of the change in the 20212020 comparative statements of shareholders equity assuming cash dividends were $4.00 million each year and that no dividends were paid prior to 2020.

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, 2021, 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
	FIFO			Average Cost			Difference
Before 2020	$	46	million	$	24	million	$	22	million
2020		32	million		18	million		14	million
2021		36	million		26	million		10	million

Required: 1. Prepare the journal entry to record the change in accounting principle. 2. Determine the net income to be reported in the 20212020 comparative income statements. 4. Indicate the affect of the change in the 20212020 comparative statements of shareholders equity assuming cash dividends were $4.00 million each year and that no dividends were paid prior to 2020.

Required 1

Required 2

Required 4

Determine the net income to be reported in the 20212020 comparative income statements. (Do not round intermediate calculations. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

	2021	2020
	($ in millions)
Net Income

Required 1

Required 2

Required 4

Determine the net income to be reported in the 20212020 comparative income statements. (Do not round intermediate calculations. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

	2021	2020
	($ in millions)
Net Income

Complete this question by entering your answers in the tabs below.

Required 1

Required 2

Required 4

Indicate the affect of the change in the 20212020 comparative statements of shareholders equity assuming cash dividends were $4 million each year and that no dividends were paid prior to 2020. (Do not round intermediate calculations. 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 Shareholders Equity
For the Years Ended Dec. 31, 2021 and 2020
($ in millions)	Common Stock	Additional Paid-in Capital	Retained Earnings	Total Shareholders Equity
Balance at Jan. 1, 2020
Balance at Dec. 31, 2020
Balance at Dec. 31, 2021