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Red Company has a calendar year end. In 20x2, Red changed its method of valuing inventory from the FIFO method to the average cost method.

Red Company has a calendar year end. In 20x2, Red changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 20x1, Reds inventories were $30.2 million (FIFO). Reds records indicated that the inventories would have totaled $22.9 million at December 31, 20x1, if determined on an average cost basis. Ignoring income taxes, what journal entry will Red use to record the adjustment on January 1, 20x2

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