On January 1, 2018, Blossom Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a $1020000 increase in the January 1, 2018 inventory. Assume that the income tax rate for all years is 30%. The cumulative effect of the accounting change should be reported by Blossom in its 2018

retained earnings statement as a $1020000 addition to the beginning balance.

income statement as a $1020000 cumulative effect of accounting change.

income statement as a $714000 cumulative effect of accounting change.

retained earnings statement as a $714000 addition to the beginning balance.