5 Cullumber Construction Company changed from the completed-contract to the percentage-of-completion method of accounting forlong-term construction contracts during 2021. For tax purposes, the company employs the completed-contract method and willcontinue this approach in the future. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriateinformation related to this change is as follows.20202021Pretax Income from:Percentage-of-CompletionNet income $$727,000644,000Completed-Contract$561.000450,000Difference$166,000194,000(a) Assuming that the tax rate is 40%, what is the amount of net income that would be reported in 2021?(b) What entry is necessary to adjust the accounting records for the change in accounting principle? (Credit account titles oreautomatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles andenter O for the amounts)Account Titles and ExplanationDebitCredit

Journal entry is the process of recording the business transactions in the accounting books for the…

Cullumber Construction Company 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. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriate information related to this change is as follows. 2020 2021 Pretax Income from: Percentage of Completion $727,000 Net income $ 644,000 Completed-Contract $561.000 450,000 Difference $166,000 194,000 (a) Assuming that the tax rate is 40%, what is the amount of net income that would be reported in 2021? (b) What entry is necessary to adjust the accounting records for the change in accounting principle? (Credit account titles ore automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts) Account Titles and Explanation Debit Credit