Exercise 22-06 Grouper Construction Company, which began operations in 2020, 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. The appropriate information related to this change is as follows. Pretax Income from Percentage-of- Completed- Completion Contract $871,000 $550,000 920,000 451,000 2020 2021 Difference $321,000 469,000 (a) Assuming that the tax rate is 20%, what is the amount of net income that would be reported in 2021? Net income $1 (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 Credit Accounts Payable Accounts Receivable Accumulated Depreciation-Buildings Accumulated Depreciation-Equipment Accumulated Depreciation-Machinery Advertising Expense Amortization Expense Allowance for Doubtful Accounts Bad Debt Expense Cash Compensation Expense Consignment Out Construction in Process Copyrights Cost of Goods Sold Deferred Gross Profit Deferred Tax Liability Depreciation Expense Dividend Revenue Due to Customer Discount on Bonds Payable Equipment Equity Investments Equity Investments (Available-for-Sale) Equity Investments (Equity Method) Fair Value Adjustment Finance Expense Gain on Disposal of Plant Assets Holding Gain or Loss-Investments Income Tax Receivable Insurance Expense Interest Expense Interest Payable Interest Receivable Interest Revenue Inventory Inventory on Consignment Investment Revenue Lawsuit Liability Lawsuit Loss Loss Due to Market Decline of Inventory Machinery Maintenance and Repairs Expense No Entry Prepaid Insurance Property, Plant and Equipment Purchases Rent Revenue Retained Earnings Revenue from Investment Salaries and Wages Expense Salaries and Wages Payable Sales Sales Commission Expense Sales Commission Payable Sales Revenue Sales Tax Expense Sales Tax Payable Share Capital Supplies Supplies Expenses Trademarks Unearned Rent Revenue Unrealized Holding Gain or Loss-Equity Unrealized Holding Gain or Loss-Income Warranty Expense Warranty Liability