Pam Erickson Construction Company 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. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriate information related to this change is as follows. Pretax Income from: Percentage-of-Completion Completed-Contract Difference 2020 $780,000 $590,000 $190,000 2021 700,000 480,000 220,000 (a) Assuming that the tax rate is 35%, what is the amount of net income that would be reported in 2021? Net income $Enter the net income in dollars (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 Enter an account title Enter a debit amount Enter a credit amount Enter an account title Enter a debit amount Enter a credit amount Enter an account title Enter a debit amount Enter a credit amount

Your answer is partially correct. Try again. Pam Erickson Construction Company 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. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriate information related to this change is as follows. Pretax Income from: Percentage-of- Completed- Completion Contract $780,000 $590,000 700,000 480,000 2020 2021 Difference $190,000 220,000 (a) Assuming that the tax rate is 35%, what is the amount of net income that would be reported in 2021? Net income (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 o for the amounts.) Account Titles and Explanation Debit Credit Construction in Process 11 Deferred Tax Liability C TDeferred Tax Liability P Pretained Earnings Retained Earnings 7 Click if you would like to Show Work for this question: Open Show Work