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Goddard Company has used the FIFO method of inventory valuation since it began operations in 2010. Goddard decided to change to the average cost method for determining inventory costs at the beginning of 2013. The following schedule shows year-end inventory balances under the FIFO and average cost methods:
Required:
1. Ignoring income taxes, prepare the 2013 journal entry to adjust the accounts to reflect the average cost method.
2. How much higher or lower would cost of goods sold be in the 2012 revised income statement?
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