Cullumber Company offers a five-year warranty on its products. Cullumber previously estimated warranty costs to be 3% of sales but in 2025 revised this estimate to 1% due to process and quality control improvements. Cullumber reported warranty costs of $79200 on $2640000 in 2023 and $94200 on $3140000 in 2024. Sales revenue for 2025 was $5280000. What is the adjustment to Retained Earnings in 2025 (ignore income tax considerations)? $0 $117000 O $64200 O $52800
Cullumber Company offers a five-year warranty on its products. Cullumber previously estimated warranty costs to be 3% of sales but in 2025 revised this estimate to 1% due to process and quality control improvements. Cullumber reported warranty costs of $79200 on $2640000 in 2023 and $94200 on $3140000 in 2024. Sales revenue for 2025 was $5280000. What is the adjustment to Retained Earnings in 2025 (ignore income tax considerations)? $0 $117000 O $64200 O $52800
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
Related questions
Question
![Cullumber Company offers a five-year warranty on its products. Cullumber previously estimated warranty costs to be 3% of sales but
in 2025 revised this estimate to 1% due to process and quality control improvements. Cullumber reported warranty costs of $79200
on $2640000 in 2023 and $94200 on $3140000 in 2024. Sales revenue for 2025 was $5280000.
What is the adjustment to Retained Earnings in 2025 (ignore income tax considerations)?
$0
$117000
$64200
$52800](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9211a3ee-a881-44f3-8841-c9ec955f6142%2F2a98104d-e42b-441b-85db-bbbc2bc410c8%2F91nzwn.png&w=3840&q=75)
Transcribed Image Text:Cullumber Company offers a five-year warranty on its products. Cullumber previously estimated warranty costs to be 3% of sales but
in 2025 revised this estimate to 1% due to process and quality control improvements. Cullumber reported warranty costs of $79200
on $2640000 in 2023 and $94200 on $3140000 in 2024. Sales revenue for 2025 was $5280000.
What is the adjustment to Retained Earnings in 2025 (ignore income tax considerations)?
$0
$117000
$64200
$52800
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning