Cullumber Construction Company, which began operations in 2017, changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2018. 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

2017 $965,000 $558,000 $407,000

2018 922,000 499,000 423,000

(a) Assuming that the tax rate is 40%, what is the amount of net income that would be reported in 2018? 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