This year, a company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31 of last year, the companys inventories were $38 million (FIFO). The company's records indicated that the inventories would have totaled $28.6 million at December 31 of last year, if determined on an average cost basis.

Required:

1. Prepare the journal entry to record the adjustment. (Ignore income taxes.)

Record the adjustment necessary to reflect the average cost method. Note: Enter debits before credits