You have been assigned to examine the financial statements of Mari, Inc. for the year ended December 31, 2023. You discover the following situations in February 2024.

The company has estimated warranty expense to be 1.8% in the past and made an entry for $145,00 in 2023. However, the company decided that it should only be 1.6% this year which amounts to $125,000

Instructions

1. Assume the trial balance has been prepared but the books HAVE NOT been closed for 2023. Assuming all amounts are material, prepare journal entries showing the adjustments that are required. (Ignore income tax considerations).
2. Assume the trial balance has been prepared but the books HAVE been closed for 2023. Assuming all amounts are material, prepare journal entries showing the adjustments that are required. (Ignore income tax considerations).