In 2021 Magnolia Construction Company began operations. The company changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2022. For tax purposes, the company employs the completed-contract method and will continue this approach in the future. The following provides the pretax financial income under both methods:

		Percentage-of-Completion		Completed-Contract
2021		$655,000		$498,000
2022		720,000		520,000

In 2022, the income tax rate is 20%. Which of the following items are part of the journal entry to record the change in the accounting principle at the beginning of 2022?

Question 20 options:

a)	debit Construction in Process for $125,600.

b)	No entry is needed.

c)	credit Retained Earnings for $125,600.

d)	debit Construction in Process for $200,000.