During 2021, a construction company that began operations in 2019 changed from the completed-contract method to the percentage-of-completion method for accounting purposes but not for tax purposes. Gross profit figures under both methods for the past three years appear below:

Completed-Contract				Percentage-of-Completion
2019			$ 448000				$ 867000
2020			595000				920000
2021			670000				1020000
			$1713000				$2807000

Assuming an income tax rate of 30% for all years and that comparative statements are not issued, the effect of this accounting change on prior periods should be reported by a increase of

$520800 on the 2021 retained earnings statement.

$769000 on the 2021 income statement.

$520800 on the 2021 income statement.

$769000 on the 2021 retained earnings statement.