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. $31,2016$ Dec. $31,2015$ Dec. $31,2014$

Net sales $$20,718$ $$20,891$ $$19,872$

Warranty expense $316560322$

Compute the average warranty expense to net sales rate over the past three years.

Round answer to two decimal places $($ex: $0\mathrm{.}02345=2\mathrm{.}35\%)$

Answer $1$

$5\mathrm{.}85$

$\%$

Using your rounded answer, compute the adjusted warranty expense for each year.

Round answers to one decimal place.

Use a negative sign to indicate if the adjustment decreases an account balance.

Income Statements Adjustments $201620152014$

Adjusted warranty expense Answer $2$

$0$

Answer $3$

$0$

Answer $4$

$0$

Adjustment required to warranty expense Answer $5$

$0$

Answer $6$

$0$

Answer $7$

$0$

Income tax expense Answer $8$

$0$

Answer $9$

$0$

Answer $10$

$0$

Net Income Answer $11$

$0$

Answer $12$

$0$

Answer $13$

$0$