Crane 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 $445000 $297000 $149000 Percentage-of-completion 745000 371000 265000 Which of the following will be included in the journal entry made by Crane to record the income effect? A debit to Retained Earnings for $148600 A debit to Retained Earnings for $222600 A credit to Retained Earnings for $148600 A credit to Retained Earnings for $222600

Crane 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 Completed contract Percentage-of-completion $445000 745000 2020 2021 $297000 $149000 371000 265000 Which of the following will be included in the journal entry made by Crane to record the income effect? A debit to Retained Earnings for $148600 A debit to Retained Earnings for $222600 A credit to Retained Earnings for $148600 A credit to Retained Earnings for $222600