Delta company uses the completed - contract method of accounting for long-term construction contracts. Delta started business in 2011 and prepared the following income statements: 2011. 2012 construction revenue 100,000 300,000 construction expense. (40000) (130000) other expenses. (50000) (70000) income before taxes. $10,000 $100000 income tax exp.30% (3000) (30000) net income. $7000 $70000 earnings per share. $0.07. $0.70

The company changes to the percentage- of completion method at the beginning of 2013. It determines the construction revenue and expense amounts nder the percentage of completion method to be as follows:

construction revenue : 2011- $200,000 2012- $420,000 2013- $900,000

construction expense: 2011- $80,000 2012- $182,000 2013- $420,000

The other expenses remain S unchanged for 2011 and 2012 and are $80,000 in 2013. Delta has not paid dividends on its 100,000 common shares outstanding. With the 2013 financial statements, the company issues comparative statements for the previous 2 years. Under the completed contract method, construction revenue and construction expense would be $600,000 and $280,000 respectively, in 2013. Delta uses the percentage of completion method for income tax purposes.

Required :

prepare the journal entry to reflect the change.

construction in progress xxxxx deferred tax liability. xxxxx retained earnings. 89600

fill in the x's