1.Mark Construction Company changed from the cost-recovery to the percentage-of-completion method of accounting for long-term construction contracts during 2019. For tax purposes, the company employs the cost-recovery method and will continue this approach in the future. The appropriate information related to this change is as follows.(5 Marks)

Pretax Income from

Percentage-of-Completion

Cost-Recovery

Difference

2018

$780,000

$610,000

$170,000

2019

700,000

480,000

220,000

Required:

a. Assuming that the tax rate is 35%, what is the amount of net income that would be reported in 2019?

b. What entry(ies) is necessary to adjust the accounting records for the change in accounting policy?