Current Attempt in Progress

Pharoah 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.

$($a$)$ Assuming that the tax rate is $30\%,$ what is the amount of net income that would be reported in $2021?$

Net income $

$($b$)$ What entry is necessary to adjust the accounting records for the change in accounting principle? $($Credit account titles are

automatically indented when amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and

enter $0$ for the amounts.$)$

Account Titles and Explanation

Debit

CreditThe before$-$tax income for Pronghorn Co$.$ for $2020$ was $\backslash (\backslash$$ $109,000\backslash )$ and $\backslash (\backslash$$ $90,000\backslash )$ for $2021.$ However, the accountant noted that the following errors had been made: Sales for $2020$ included amounts of $\backslash (\backslash$$ $40,400\backslash )$ which had been recelved in cash during $2020,$ but for which the related products were delivered in $2021.$ Titte did not pass to the purchaser unti $2021.2.$ The inventory on December $31,2020,$ was understated by $\backslash (\backslash$$ $8,500\backslash ).3.$ The bookkeeper in recording interest expense for both $2020$ and $2021$ on bonds payable made the following entry on an annual basis. Interest Expense $15,000$ Cash $15,000$ balance in the Equipment account at the end of the year in its determination of depreciation charges. answers to $0$ decimal places, e$.$g$.125.)$