Pam Erickson Construction Company changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2008. 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.

Instructions
(a) Assuming that the tax rate is 35%, what is the amount of net income that would be reported in 2008?
(b) What entry (ies) are necessary to adjust the accounting records for the change in accountingprinciple?

Pretax Income from 2007 2008 Percentage-of-Completion $780,000 700,000 Completed-Contract $590,000 480,000 Difference $190,000 220,000