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, 2016Dec. 31, 2015Dec. 31, 2014
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%)
Using your rounded answer, compute the adjusted warranty expense for each year.
Income Statements Adjustments201620152014
Adjusted warranty expense???
Adjustment required to warranty expense???
Income tax expense???
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