Cherokee Construction Company began operations in 2011 and changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2012. 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.

            

Instructions
  (a) Assuming that the tax rate is 35%, what is the amount of net income that would be reported in 2012?
  (b) What entry(ies) are necessary to adjust the accounting records for the change in accounting principle?