(L01) (Change in Principle—Long-Term Contracts) Cullen Construction Company, which began operations in 2017, changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2018. For tax purposes, the company employs the completed-contract method and will continue this approach in the future. The appropriate information related to this change is as follows.

Pretax Income Percentage-of-Completion Completed-Contract Difference 2017 $880,000 $590,000 $290,000 2018 900,000 480,000 420,000 Instructions

(a) Assuming that the tax rate is 40%, what is the amount of net income that would be reported in 2018?

(b) What entry(ies) are necessary to adjust the accounting records for the change in accounting principle?