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Sheridan Company offers a five-year warranty on its products. Sheridan previously estimated warranty costs to be 3% of sales but in 2025 revised this estimate to 1% due to process and quality control improvements. Sheridan reported warranty costs of $77100 on $2570000 in 2023 and $92100 on $3070000 in 2024. Sales revenue for 2025 was $5140000. What is the adjustment to Retained Earnings in 2025 (ignore income tax considerations)? O $62100 O $113500 O $51400 0 $0

Sheridan Company offers a five-year warranty on its products. Sheridan previously estimated warranty costs to be 3% of sales but in 2025 revised this estimate to 1% due to process and quality control improvements. Sheridan reported warranty costs of $77100 on $2570000 in 2023 and $92100 on $3070000 in 2024. Sales revenue for 2025 was $5140000. What is the adjustment to Retained Earnings in 2025 (ignore income tax considerations)? O $62100 O $113500 O $51400 0 $0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sheridan Company offers a five-year warranty on its products. Sheridan previously estimated warranty costs to be 3% of sales but in 2025 revised this estimate to 1% due to process and quality control improvements. Sheridan reported warranty costs of $77100 on $2570000 in 2023 and $92100 on $3070000 in 2024. Sales revenue for 2025 was $5140000. What is the adjustment to Retained Earnings in 2025 (ignore income tax considerations)? O $62100 O $113500 O $51400 0 $0
Transcribed Image Text:Sheridan Company offers a five-year warranty on its products. Sheridan previously estimated warranty costs to be 3% of sales but in 2025 revised this estimate to 1% due to process and quality control improvements. Sheridan reported warranty costs of $77100 on $2570000 in 2023 and $92100 on $3070000 in 2024. Sales revenue for 2025 was $5140000. What is the adjustment to Retained Earnings in 2025 (ignore income tax considerations)? O $62100 O $113500 O $51400 0 $0
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