Blossom Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2021. In 2021, it changed to the percentage-of-completion method.

The company decided to use the same for income tax purposes. The tax rate enacted is 40%. Income before taxes under both the methods for the past three years appears below.

2019 2020 2021

Completed contract

$385000

$261000 $137000

Percentage-of-completion

685000 323000

205000

4.What amount will be debited to Construction in Process account, to record the change at beginning of 2021?

$238000

$62000

$137000

$362000