A company reported inventory in the 2023 year-end balance sheet, using the FIFO method, as $185,000. In 2024, the company decided to change its inventory method to average cost. If the company had used the average cost method in 2023, ending inventory would have been $171,000. What adjustment would the company make for this change in inventory method?
Multiple Choice
No adjustment is necessary.
Debit Retained earnings for $14,000; Credit Cost of goods sold for $14,000
Debit Retained earnings for $14,000; Credit Inventory for $14,000
Debit Inventory for $14,000; Credit Cost of goods sold for $14,000