Waterway Industries has recently reported steadily increasing income. The company reported income of 23,200 in 2019, 29,000 in 2020, and 34,800 in 2021. A number of market analysts have recommended that investors buy Waterway shares because the analysts expect the steady growth in income to continue. Waterway is approaching the end of its fiscal year in 2022, and it again appears to be a good year. However, it has not yet recorded warranty expense. Based on prior experience, the 2022 warranty expense should be around 5,800, but some managers have approached the controller to suggest a larger, more conservative warranty expense should be recorded this year. Income before warranty expense is 48,800. Specifically, by recording a 7,400 warranty accrual this year, Waterway could report an increase in income for this year and still be in a position to cover its warranty costs in future years.

(c) Assume income before warranty expense is 48,800 for both 2022 and 2023 and that total warranty expense over the 2-year period is 11,600. What is the appropriate accounting in this situation?

Find the following for 2022 and 2023:

1) Income before warranty expense

2) Warranty Expense

3) Income