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 $$23,162$ $$23,335$ $$22,316$

Warranty expense $421665427$

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

$2\mathrm{.}2$

$\%$

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

$509\mathrm{.}56$

Answer

$513\mathrm{.}37$

Answer

$490\mathrm{.}95$

Adjustment required to warranty expense Answer

Answer

Answer

Income tax expense Answer

Answer

Answer

Net Income Answer

Answer

Answer