The Opal Company Was Incorporated and Began Operations on January

Essay

The Opal Company was incorporated and began operations on January 1, 2016. Opal used the weighted-average method for costing inventories. Effective January 1, 2017, Opal changed to FIFO for costing inventories and can justify the change. Information related to 2016 and 2017 inventory cost and net income is presented below: $\begin{array}{crr}&2016&2017\\\hline\text { Ending inventory, using: }\\\text { Weighted-average } & \$ 650,000 & \$ 620,000 \\\text { FIFO } & 680,000 & 630,000 \\\text { Net income } & 700,000 & 750,000 \\& \text { (using average) } & \text { (using FIFO) }\end{array}$ Opal's income tax rate is 30% for both 2016 and 2017.
Required:
Calculate the amount of the cumulative effect of the change on beginning retained earnings on January 1, 2017, that would appear on Opal's statement of retained earnings for the year ended December 31, 2017.