Financial vs Taxable income (LO. 10) The Martin Corporation is an accrual basis taxpayer that manufactures cellular phones. The company provides a 5-year limited warranty on its phones and estimates that warranty expenses will be 1.0% of sales. During the current year, Martin has sales of $13,000,000 and incurs $140,000 of warranty expenses. For financial accounting purposes, Martin Corporation can deduct $ and for tax purposes, Martin is allowed to deduct