Orlando Company has used the average cost method for inventory valuation since it began business in 2005, but has elected to change to the FIFO method starting in 2008. Year-end inventory valuations under each method are shown below:
Required:
What journal entry, if any, would Orlando record in 2008 for the cumulative effect of the change in accounting principle (ignore income taxes)?
Definitions:
Distributive Justice
The perceived fairness of outcomes distributed among members of a group, including resources, rewards, and responsibilities.
Business Relationship
The interaction, connection, or association between two or more businesses that arises from commercial transactions or mutual business interests.
Outcomes
The results or consequences of actions taken by an individual, group, or organization, often measured to assess effectiveness or success.
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