Cheyenne Construction Company changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2021. For tax purposes, the company employs the completed-contract method and will continue this approach in the future. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriate information related to this change is as follows. Pretax Income from: Percentage-of-Completion Completed-Contract Difference

2020 784,000 $578,000 $206,000

2021 708,000 460,000 248,000

(a) Assuming that the tax rate is 40%, what is the amount of net income that would be reported in 2021?

Net income $Enter the net income in dollars (b) What entry is necessary to adjust the accounting records for the change in accounting principle?