For a recent year, the balance sheet for The Campbell Soup Company (CPB) includes accrued expenses of $609 million. The income before taxes for Campbell for the year was $979 million.
a. Assume the adjusting entry for $609 million of accrued expenses was not recorded at the end of the year. By how much would income before taxes have been misstated?
b. What is the percentage of the misstatement in (a) to the reported income of $979 million? Round to one decimal place.