A company switched from the cash basis to the accrual basis for recognizing warranty expense. The unrecorded liability for warranties was $3.0 million at the beginning of the year. Its tax rate is 25%. The company booked a year-end warranty liability of $4 million. As a result of this change, the firm would: Multiple Choice Report a prior period adjustment decreasing retained earnings by $2,250,000. Report a current period charge decreasing net income by $2,250,000. Report a current period charge decreasing net income by $750,000. Report a prior period adjustment decreasing retained earnings by $750,000.
