At the beginning of 2017, Wertz Construction Company changed from the completed-contract method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the completed-contract method for tax purposes. For years prior to 2017, pretax income under the two methods was as follow: percentage-of-completion $120,000, and completed-contract 580,000. The tax rate is 35%.

Using information

a. Prepare journal entry to record the change at the beginning of 2018.

b. Present partial income statement for the years 2017 and 2018.

c. Prepare Retained Earning statement, assuming that the retained earnings beginning balance as of January 1 2017 is $2,000,000.

Answer rating: 100% (QA)

Part a The journal income to record the change is provided as below Account Titles Debit Credit Cons... View the full answer