Use the Following Information for Questions 44 and 45

question 3

Multiple Choice

Use the following information for questions 44 and 45.
Dream Home Inc., a real estate developing company, was accounting for its long-term contracts using the completed contract method prior to 2015. In 2015, 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.
-Which of the following will be included in the journal entry made by Dream Home to record the income effect?

• A) A debit to Retained Earnings for $150,000
• B) A credit to Retained Earnings for $150,000
• C) A credit to Retained Earnings for $100,000
• D) A debit to Retained Earnings for $100,000

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Definitions:

Orbits Around

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Volcanically Active

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Sulfur-Rich Lava

Lava that contains high levels of sulfur, typically associated with highly explosive volcanic eruptions and producing distinctive yellow deposits.

Galilean Moons

The four largest moons of Jupiter—Io, Europa, Ganymede, and Callisto—discovered by Galileo Galilei in 1610.