6. During 2021, a construction company that began operations in 2019 changed from the completed-contract method to the percentage-of-completion method for accounting purposes but not for tax purposes. Gross profit figures under both methods for the past three years appear below:

Completed-Contract Percentage-of-Completion

2019

$ 421000 $ 834000

2020

565000 890000

2021

640000 990000

$1626000 $2714000

Assuming an income tax rate of 30% for all years and that comparative statements are not issued, the effect of this accounting change on prior periods should be reported by a increase of

$516600 on the 2021 income statement.

$763000 on the 2021 income statement.

$516600 on the 2021 retained earnings statement.

$763000 on the 2021 retained earnings statement.