The Coclin Company has used the LIFO method of accounting for inventory during its first two years of operation, 2022 and 2023. At the beginning of 2024, Coclin decided to change to the average cost method for both tax and financial reporting purposes. The following table presents information concerning the change for 20222024. The income tax rate for all years is 25%. Income before Income Tax Using Average Cost Method Using LIFO Method Difference Income Tax Effect Difference after Tax 2022 $ 87,000 $ 58,000 $ 29,000 $ 7,250 $ 21,750 2023 42,500 34,000 8,500 2,125 6,375 Total $ 129,500 $ 92,000 $ 37,500 $ 9,375 $ 28,125 2024 $ 50,000 $ 45,500 $ 4,500 $ 1,125 $ 3,375 Coclin issued 44,000 $1 par, common shares for $205,000 when the business began, and there have been no changes in paid-in capital since then. Dividends were not paid the first year, but $10,000 cash dividends were paid in both 2023 and 2024.

Required:

a. Prepare the journal entry at January 1, 2024, to record the change in accounting principle.

b. Prepare the 20242023 comparative income statements beginning with income before income taxes.

c. Prepare the 20242023 comparative statements of shareholders equity. [Hint: The 2022 statements reported retained earnings of $43,500. This is $58,000 ($58,000 25%)].

Prepare the journal entry at January 1,2024 , to record the change in accounting principle. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Journal entry worksheet Note: Enter debits before credits. Prepare the 2024-2023 comparative income statements beginning with income before income taxes. Note: Round EPS answers to 2 decimal places. Prepare the 2024-2023 comparative statements of shareholders' equity. [Hint: The 2022 statements reported retained earnings of $43,500. This is $58,000($58,00025%).] Note: Deductions should be indicated by a minus sign