Pam Erickson Construction Company 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. 2025 2026 (a) Percentage-of-Completion (b) Net income $ Pretax Income from Your answer is correct. eTextbook and Media $780,000 List of Accounts 700,000 Assuming that the tax rate is 20%, what is the amount of net income that would be reported in 2026? Cost-Recovery 560000 Difference $590,000 $190,000 480,000 220,000 Account Titles and Explanation What entry is necessary to adjust the accounting records for the change in accounting principle? (Credit account titles are automatically indented when the 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. List all debit entries before credit entries.) Debit 100 Attempts: 1 of 3 used Credit

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