Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sage Construction Company, which began operations in 2020, changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2021. For

Sage Construction Company, which began operations in 2020, 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. The appropriate information related to this change is as follows.

Pretax Income from

Percentage-of-Completion

Completed-Contract

Difference

2020 $871,000 $550,000 $321,000
2021 920,000 451,000 469,000

(a) Assuming that the tax rate is 20%, 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 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Text And Cases

Authors: Robert Anthony, James S. Reece, Kenn Merchant, David Hawkins

11th International Edition

0071232265, 978-0071232265

More Books

Students also viewed these Accounting questions

Question

Discuss global cultural differences in GLOBE dimensions.

Answered: 1 week ago

Question

LO1 Discuss the objectives of human resource management.

Answered: 1 week ago