Hampton's Construction, Inc What Is the Journal Entry to Record the Change in of Accounting

question 5

Multiple Choice

Hampton's Construction, Inc. decided to change from the completed-contract method of accounting to the percentage-of-completion method. The following information is available for net income. Ignore income tax effects: Net Income
$\begin{array}{ccc} \underline{\text { Year Ended } }& \underline{\text { Percentage of Completion}}& \underline{\text { Completed Contract }}\\\text { December } 31,2018 & \$ 180,00 & \$ 125,000 \\\text { December } 31,2019 & 200,000 & 149,000 \\\text { December } 31,2020 & 201,000 & 180,000\end{array}$

What is the journal entry to record the change in accounting principle on January 1, 2020?

• A) No entry needed.
• B) \(\begin{array}{llcc}
• \text {Construction in Progress } &106,000\\
• \text { Deferred Tax Liability }&&106,000 \\
• \end{array}\)
• C) \[\begin{array} { l l }
• \text { Retained Earnings } & 127,000 \\
• \quad \text { Construction in Progress } &&127,000
• \end{array}\]
• D) \(\begin{array}{llcc}
• \text { Construction in Progress} &106,000 \\
• \text { Retained Earnings } &&106,000\\
• \end{array}\)

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