CASE 2: CHANGES IN ACCOUNTING METHOD DATA: 1. American Construction began operations on January 1, 2020. The company is dedicated to the construction of housing projects and office buildings. 2. During 2022, the American Construction Company decided to change the method of accounting for its long-term construction contracts from the completed contract method to the percentage of completion method for financial disclosure purposes. For tax purposes, the company uses and will continue to use the completed contract method. 3. The following table presents the gross profit recognized in the statement of income and expenses under the completed contract method and that which would have been recognized under the percentage of completion method. Gross profit Completed Contract Completion 2020 100,000 2021 220,000 2022 330,000 percentage 200,00 340,000 410,000 4. The company's tax rate is 40% for all periods. Instructions: 1. Prepare the journal entry to record this change. 2. Determine the ending balance of the retained earnings account as of December 31, 2021 and 2022 to be reported on the 2022 10K. The company has never declared dividends. Assume that the company reported the following balances before adjustment at the beginning of each year (you will need to use the information from the previous questions to determine the ending balance): Net Income 2021 2022 Under Contract Low Completion Completed 900,000 Percentage 1,000,000 Retained Earnings at January 1, As originally reported 2021 500,000 2022 1,400,000