Rockwell Corporation uses a periodic inventory system and has used the FIFO cost method since inception of the company in 1979. In 2021, the company decided to switch to the average cost method. Data for 2021 are as follows:

Beginning inventory, FIFO (5,600 units @ $26)				$	145,600
Purchases:
5,600 units @ $32	$	179,200
5,600 units @ $36		201,600			380,800
Cost of goods available for sale				$	526,400
Sales for 2018 (10,000 units @ $75)				$	750,000

Additional Information:

1. The company's effective income tax rate is 25% for all years.
2. If the company had used the average cost method prior to 2021, ending inventory for 2020 would have been $140,000.
3. 6,800 units remained in inventory at the end of 2021.

Required: 1. Ignoring income taxes, prepare the 2021 journal entry to adjust the accounts to reflect the average cost method.

2. What is the effect of the change in methods on 2021 net income?

Journal entry worksheet Record adjustment to reflect average cost method. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal Required 1 Required 2 What is the effect of the change in methods on 2021 net income? in cost of goods The effect of the change for the year 2021 is a sold resulting in a in income after tax. in income before taxes and a(n)