Recording Entry and Determining Effect on Net Income for Change in Accounting Principle Sterling Co. changed from FIFO to average cost on January 1 of Year 3. Inventory balances on December 31 under both methods follow for the prior two year-ends. Sterling Co. has a December 31 year-end. a. Prepare the entry on January 1 of Year 3 to record the accounting change. Ignore taxes. - Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A--credit" as the account names and leave the Dr, and Cr. answers blank (zero). b. Determine how the companys Year 2 income is impacted when retroactively adjusted for the change in accounting principle. Ignore taxes. - Note: Do not use a negative sign with your answer. Net income will 5 Recording Entry and Determining Effect on Net Income for Change in Accounting Principle Sterling Co. changed from FIFO to average cost on January 1 of Year 3. Inventory balances on December 31 under both methods follow for the prior two year-ends. Sterling Co. has a December 31 year-end. a. Prepare the entry on January 1 of Year 3 to record the accounting change. Ignore taxes. - Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A--credit" as the account names and leave the Dr, and Cr. answers blank (zero). b. Determine how the companys Year 2 income is impacted when retroactively adjusted for the change in accounting principle. Ignore taxes. - Note: Do not use a negative sign with your answer. Net income will 5