Blago Wholesale Company began operations on January 1, 20X1, and uses the average cost method in costing its inventory. Management is contemplating a change to the FIFO method in 20X2 and is intereste

Blago Wholesale Company began operations on January 1, 20X1, and uses the average cost method in costing its inventory. Management is contemplating a change to the FIFO method in 20X2 and is interested in determining how such a change will affect net income. Accordingly, the following information has been developed:

                                   20X1                      20X2

Final inventory:

     Average cost     $150,000                  $255,000 

     FIFO                   160,000                     270,000 

Condensed income statements for Blago Wholesale appear below:

                                                                                                                                   20X1                      20X2

Sales                                                                                                                 $1,000,000              $1,200,000 

Cost of goods sold                                                                                          600,000                       720,000 

Gross profit                                                                                                        400,000                       480,000 

Selling, general, and administrative                                                               250,000                      275,000 

Net income                                                                                                        $150,000                   $205,000 

Required:

Based on this information, what would 20X2 net income be after the change to the FIFO method? Ignore any income tax effects of this change in accounting method.