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Sutton Corporation switches from revenue recognition at a point in time to recognitions over a period of time in accordance with the new accounting standars for revenue recognition. Previously Motown recognized revenue at a point in time for tax purposes and will continue to do so. The following data is available: Old method for book: at a point in time Old method for tax: at a point in time New method for book: over a period of time Method for tax: unchanged; at a point in time Beginning Retained Earnings 1/1/X4| $ 850,120 Tax Rate 18% # Common shares outstanding 32,000 Difference in Income Diff Tax Income in income Effect Effect Pretax Income using Diff in Inc. net of Over a period At a point tax expense tax of time in time (A) (B) (A)-(B) Year Prior to 20X4 $ 450,000 $ 225,000 $ 225,000 $ 40,500 $ 184,500 In 20X4 $ 68,000 $ 43,000 25,000 4,500 $ 20,500 Total at beginning of 20X5 $ 518,000 $ 268,000 $ 250,000 45,000 $ 205,000 Total in 20X5 $ 198,000 $ 156,000 $ 42,000 $ 7,560 $ 34,440