#1 A company overstated its liability for warranties by $290,000. Its tax rate is 30%. As a result of this error, income tax expense is:

a) Unaffected

b) Overstated by $87,000

c) Understated by $87,000

d) Understated by $203,000

#2 At the end of the current year, a company failed to accrue interest of $530,000 on its investments in municipal bonds. Its tax rate is 40%. As a result of this error, net income is:

a) Unaffected

b) Understated by $318,000

c) Understated by $530,000

d) Understated by $212,000

Please show your work to understand the answer, Many thanks!