Pam Erickson Construction Company changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2015. 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
2014	$780,000	$590,000	$190,000
2015	700,000	480,000	220,000

(a)Assuming that the tax rate is35%, what is the amount of net income that would be reported in 2015?

Net income

$

(b)What entry(ies) are necessary to adjust the accounting records for the change in accounting principle?

Account Titles and Explanation	Debit	Credit