Crane Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2021. In 2021, it changed to the percentage-of-completion method. The company decided to use the same for income tax purposes. The tax rate enacted is 40%. Income before taxes under both the methods for the past three years appears below.     2019   2020   2021 Completed contract   $390000   $264000   $138000 Percentage-of-completion   690000   327000   210000 Which of the following will be included in the journal entry made by Crane to record the income effect? A credit to Retained Earnings for $133200 A credit to Retained Earnings for $217800 A debit to Retained Earnings for $196200 A debit to Retained Earnings for $133200

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Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.