Problem 16-35 (C) (LO. 3) Carolina Builders Company is a contractor and consulting firm. The company also sells construction equipment to its clients. The sales of equipment account for approximately 45% of the company's gross receipts. The company has consistently used the cash method to report its income from services and the accrual method to report its income from the sale of inventory. In May of the current year, Carolina Builders' accountant discovered that as a small business, the company qualifies to use the cash method for all of its activities. The company is a calendar year taxpayer. As of the beginning of the current year, the company had $623,000 of inventory on hand and $111,500 of accounts receivable from the sales of equipment and $56,000 of receivables from the consulting services. a. Compute the total adjustment due to the change in accounting method. $ b. Is the adjustment positive or negative? because asset accounts are being and thus taxable The adjustment is income. c. When can the adjustment be taken into account in computing taxable income