On January 1, 2011, Randall Construction decided to change from the completed contract method of accounting for long-term construction contracts to the percentage-of-completion method. The company will continue to use the completed contract method for tax purposes.
The tax rate is 30%. The following are all relevant data concerning the change.
| Year | Income before income tax % of Completion | Completed Contract |
| Before 2010 | 500,000 | 300,000 |
| 2010 | 400,000 | 250,000 |
| 2011 | 450,000 | 400,000 |
Required:
(1.) Prepare the journal entry to record the accounting change.
(2.) Determine the net income to be reported in the 2011-2010 comparative income statements.
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