Reformulating Financial Statements For Warranty Expense Income statement data for Whirlpool Industries from the company's 2016 financial statements follow. Use these data to reformulate the income statement for 2014, 2015, and 2016 under the assumption that warranty expense is a constant percentage of revenue across all three years. Specifically, compute the adjustments to: warranty expense, income tax expense, and net income. The company's tax rate is 30%. 12 Months Ended ($ millions) Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014 Net sales $22,273 281 $22,446 525 $21,427 287 Warranty expense Compute the average warranty expense to net sales rate over the past three years. Round answer to two decimal places (ex: 0.02345= 2,35 %) 0 % Using your rounded answer, compute the adjusted warranty expense for each year. Round answers to one decimal place. • Use a negative sign to indicate if the adjustment decreases an account balance. 2015 Income Statements Adjustments Adjusted warranty expense Adjustment required to warranty expense Income tax expense Net Income $ 2016 0 $ 0 0 0 0 $ 0 0 0 2014 0 0 0 0

Reformulating Financial Statements For Warranty Expense Income statement data for Whirlpool Industries from the company's 2016 financial statements follow. Use these data to reformulate the income statement for 2014, 2015, and 2016 under the assumption that warranty expense is a constant percentage of revenue across all three years. Specifically, compute the adjustments to: warranty expense, income tax expense, and net income. The company's tax rate is 30%. 12 Months Ended ($ millions) Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2014 Net sales $22,273 281 $22,446 525 $21,427 287 Warranty expense Compute the average warranty expense to net sales rate over the past three years. Round answer to two decimal places (ex: 0.02345= 2,35 %) 0 % Using your rounded answer, compute the adjusted warranty expense for each year. Round answers to one decimal place. • Use a negative sign to indicate if the adjustment decreases an account balance. 2015 Income Statements Adjustments Adjusted warranty expense Adjustment required to warranty expense Income tax expense Net Income $ 2016 0 $ 0 0 0 0 $ 0 0 0 2014 0 0 0 0

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter12: Liabilities: Off-balance-sheet Financing, Retirement Benefits, And Income Taxes

Section: Chapter Questions

Problem 23E

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