Rockwell Corporation uses a periodic Inventory system and has used the FIFO cost method since inception of the company in 1979. In 2024, the company decided to switch to the average cost method. Data for 2024 are as follows: Beginning inventory, FIFO (5,000 units @ $26) Purchases: 5,000 units @ $31 5,000 units @ $35 Cost of goods available for sale $ 130,000 $ 155,000 175,000 330,000 $ 460,000 $ 310,000 sales for 2024 (5,000 units @ $62) Additional Information: a. The company's effective Income tax rate is 25% for all years. b. If the company had used the average cost method prior to 2024, ending Inventory for 2023 would have been $120,000. c. 10,000 units remained in Inventory at the end of 2024. Required: 1. Ignoring Income taxes, prepare the 2024 journal entry to adjust the accounts to reflect the average cost method. 2. What is the effect of the change in methods on 2024 net Income? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the effect of the change in methods on 2024 net income? The effect of the change for the year 2024 is a in cost of goods in income before taxes and a(n) sold resulting in a in income after tax. < Required 1 Required 2 >

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…