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On December 31, 2021, Cullumber, Inc. appropriately changed its inventory valuation method to FIFO cost from weighted-average cost for financial statement and income tax purposes.

On December 31, 2021, Cullumber, Inc. appropriately changed its inventory valuation method to FIFO cost from weighted-average cost for financial statement and income tax purposes. The change will result in a $2950000 increase in the beginning inventory at January 1, 2021. Assume a 40% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is

$1180000.

$1770000.

$0.

$2950000.

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