At the beginning of 2018, a construction company that began operations in 2016 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

2016 $ 950,000 $ 1,800,000

2017 1,250,000 1,900,000

2018 1,400,000 2,100,000

Assuming an income tax rate of 30% for all years, the effect of this accounting change on prior periods should be reported by f

Journal Entry at the beginning of 2018

a What amount will be debited to Construction in Process account, to record the change at beginning of 2018?

b What amount will be credited to Deferred Tax Liability account?

c What amount will be credited to Retained Earnings account?