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stich3 [128]
3 years ago
9

A company switched from the cash basis to the accrual basis for recognizing warranty expense. The unrecorded liability for warra

nties was $1.6 million at the beginning of the year. Its tax rate is 35%. The company booked a year-end warranty liability of $3 million. As a result of this change, the firm would:
Business
1 answer:
Ostrovityanka [42]3 years ago
6 0

Answer:

Report a prior period adjustment decreasing retained earnings by $1,040,000

Explanation:

Report a prior period adjustment decreasing retained earnings by $1,040,000

Dr Retained earnings $1,040,000

Dr Deferred tax liability $560,000

(35%×$1,600,000)

Cr Estimated warranty liability $1,600,000

Therefore As a result of this change, the firm would Report a prior period adjustment decreasing retained earnings by $1,040,000

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Jackson motors tells sue, a consumer, that bliss automobiles are made with metal bodies when they are in fact made of fiberglass
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8 0
1 year ago
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8 0
2 years ago
E20.5 (LO 3) (Application of Years-of-Service Method) Andrews Company has five employees participating in its defined benefit pe
GuDViN [60]

<u>Solution and Explanation:</u>

<u>Computation of service years </u>

Year  Jim  Paul  Nancy  Dave  Kathy  Total  *  Cost  Amortization

2014  1  1  1  1  1  5            *  3000     15000

2015  1  1  1  1  1  5             *  3000  15000

2016  1  1  1  1  1  5            *  3000  15000

2017   1  1  1  1  4            *  3000  12000

2018    1  1  1  3             *  3000  9000

2019     1  1  2              *  3000  6000

                               72000

<u>Future years of service </u>        

Jim         3          

Paul  4          

Nancy  5          

Dave  6          

Kathy  6          

       24          

cost per service year $=\$ 72000 / 24=\$ 3000$

8 0
3 years ago
What line item flows from the statement of retained earnings to the balance​ sheet?
-Dominant- [34]

Answer:

Retained Earnings

Explanation:

The statement of retained earnings is prepared after preparing the income statement but before preparing the balance sheet. The reason behind this is that the statement of retained earnings is used to calculate the amount of retained earnings at the end of the period to be shown in the balance sheet.

3 0
3 years ago
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