E$21\mathrm{.}1($LO $1)($Change in Principle$$Long$-$Term Contracts$)$ Pam Erickson Construction Com$-$pany changed from the cost$-$recovery to the percentage$-$of$-$completion method of accounting for long$-$term construction contracts during $2026.$ For tax purposes, the company employs the cost$-$recovery 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.

Pretax Income from

$20252026$

Percentage$-$of$-$Completion $$780,000700,000$

Cost$-$Recovery $$590,000480,000$

Difference $$190,000$

$220,000$

Instructions a$.$ Assuming that the tax rate is $20\%,$ what is the amount of net income that would be reported in $2026?$ b$.$ What entry$($entries$)$ are necessary to adjust the accounting records for the change in accounting principle?