Change Of Accounting On Beginning Retained Earnings 548623

On December 31, 2013, Gifts Galore, Inc. appropriately changed its inventory valuation method from weighted-average cost to FIFO method for financial statement and income tax purposes. The change will result in a $3,600,000 increase in the beginning inventory at January 1, 2013. Assume a 35% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is:

a)$0.

b)$1,260,000.

c)$3,600,000.

d)$2,340,000.