2) Over the past 4 years, Matador has estimated warranty expense based on 3.5% of sales. On May 1, 2022, after reviewing its most recent year end number for actual warranties paid, it decided to change this estimate to 4.75%. If Matador had used the 4.75% in the past, warranty expenses would be $150,000 higher in prior years. During fiscal 2022, Matador had earned sales revenues of $2,750,000 of which 20% were cash sales and 80% were credit sales. The bookkeeper calculated warranty expenses for 2022 using the 3.5%. Round answer to nearest whole dollar. Determine the adjustment to ICO. Matador has a corporate tax rate of 30%.
2) Over the past 4 years, Matador has estimated warranty expense based on 3.5% of sales. On May 1, 2022, after reviewing its most recent year end number for actual warranties paid, it decided to change this estimate to 4.75%. If Matador had used the 4.75% in the past, warranty expenses would be $150,000 higher in prior years. During fiscal 2022, Matador had earned sales revenues of $2,750,000 of which 20% were cash sales and 80% were credit sales. The bookkeeper calculated warranty expenses for 2022 using the 3.5%. Round answer to nearest whole dollar. Determine the adjustment to ICO. Matador has a corporate tax rate of 30%.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 10E
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![2) Over the past 4 years, Matador has estimated warranty expense based on 3.5% of sales.
On May 1, 2022, after reviewing its most recent year end number for actual warranties
paid, it decided to change this estimate to 4.75%. If Matador had used the 4.75% in the
past, warranty expenses would be $150,000 higher in prior years. During fiscal 2022,
Matador had earned sales revenues of $2,750,000 of which 20% were cash sales and 80%
were credit sales. The bookkeeper calculated warranty expenses for 2022 using the 3.5%.
Round answer to nearest whole dollar. Determine the adjustment to ICO. Matador has a
corporate tax rate of 30%.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffa5f8f28-747d-45c8-80ff-4d0fea11700a%2Fbc7c99e6-e83f-4d1f-a8a2-429056a62da6%2Fny67cw9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2) Over the past 4 years, Matador has estimated warranty expense based on 3.5% of sales.
On May 1, 2022, after reviewing its most recent year end number for actual warranties
paid, it decided to change this estimate to 4.75%. If Matador had used the 4.75% in the
past, warranty expenses would be $150,000 higher in prior years. During fiscal 2022,
Matador had earned sales revenues of $2,750,000 of which 20% were cash sales and 80%
were credit sales. The bookkeeper calculated warranty expenses for 2022 using the 3.5%.
Round answer to nearest whole dollar. Determine the adjustment to ICO. Matador has a
corporate tax rate of 30%.
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