E$22\mathrm{.}6($LO $1)($Change in Principle$$Long$-$Term Contracts$)$ Cullen Construction Company,

which began operations in $2020,$ changed from the completed$-$contract to the percentage$-$of$-$completion

method of accounting for long$-$term construction contracts during $2021.$ 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

$2020$ $$880,000$ $$590,000$ $$290,000$

$2021900,000480,000420,000$

Instructions

a$.$ Assuming that the tax rate is $20\%,$ what is the amount of net income that would be reported in $2021?$

b$.$ What entry$($ies$)$ are necessary to adjust the accounting records for the change in accounting

principle?