3. During 2022, a construction company changed from the cost-recovery method to the percentage-of-completion method for accounting purposes but not for tax purposes. Gross profit figures under both methods for the past three years appear below:

| | Cost-Recovery | Percentage-of-Completion |
| --- | --- | --- |
| 2020 | $ 475,000 | $ 800,000 |
| 2021 | 625,000 | 950,000 |
| 2022 | 700,000 | 1,050,000 |
| | $1,800,000 | $2,800,000 |

Assuming an income tax rate of 40% for all years, the effect of this accounting change on prior periods should be reported by a credit of what amount on the 2022 retained earnings statement?