$[$This problem is a variation of $P20-12,$ modified to consider income tax effects.$]$

Williams$-$Santana Inc. is a manufacturer of high$-$tech industrial parts that was started in $2009$ by two talented engineers with little business

training. In $2024,$ the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The

audit occurred during $2024$ before any adjusting entries or closing entries were prepared. The income tax rate is $25\%$ for all years.

a$.$ A five$-$year casualty insurance policy was purchased at the beginning of $2022$ for $$35,000.$ The full amount was debited to insurance expense

at the time.

b$.$ Effective January $1,2024,$ the company changed the salvage values used in calculating depreciation for its office building. The building cost

$$600,000$ on December $29,2013,$ and has been depreciated on a straight$-$line basis assuming a useful life of $40$ years and a salvage value of

$$100,000.$ Declining real estate values in the area indicate that the salvage value will be no more than $$25,000.$

c$.$ On December $31,2023,$ merchandise inventory was overstated by $$25,000$ due to a mistake in the physical inventory count using the periodic

inventory system.

d$.$ The company changed inventory cost methods to FIFO from LIFO at the end of $2024$ for both financial statement and income tax purposes.

The change will cause a $$960,000$ increase in the beginning inventory at January $1,2025.$

e$.$ At the end of $2023,$ the company failed to accrue $$16,400$ of sales commissions earned by employees during $2023.$ The expense was

recorded when the commissions were paid in early $2024.$

f$.$ At the beginning of $2022,$ the company purchased a machine at a cost of $$720,000.$ Its useful life was estimated to be ten years with no

salvage value. The machine has been depreciated by the double$-$declining balance method. Its book value on December $31,2023,$ was

$$460,800.$ On January $1,2024,$ the company changed to the straight$-$line method.

g$.$ Warranty expense is determined each year as $1\%$ of sales. Actual payment experience of recent years indicates that $0\mathrm{.}75\%$ is a better

indication of the actual cost. Management effects the change in $2024.$ Credit sales for $2024$ are $$4,000,000$; in $2023$ they were $$3,700,000.$

Required:

For each situation

Identify whether it represents an accounting change or an error. If an accounting change, identify the type of change.

Prepare any journal entry necessary as a direct result of the change or error correction, as well as any adjusting entry for $2024$ related to the

situation described. Any tax effects should be adjusted for through Income tax payable or Refund$-$income tax.