Question
The accounting department of your company has just delivered a draft of the current year's financial statements to you. The summary is as follows: Beginning
The accounting department of your company has just delivered a draft of the current year's financial statements to you. The summary is as follows:
Beginning of the Year | End of the Year | |
Total Assets | $550,000 | $628,000 |
Total Liabilities | 210,000 | 207,000 |
Total Equity | 340,000 | 421,000 |
Net Income for the Year | 106,100 | |
Common Shares Outstanding | 20,000 | 20,000 |
You discovered that they have not adjusted for estimated bad debt expenses of $8,700. For each of the following ratios, calculate:
1. The ratio that would have resulted had the error not been discovered (i.e. the incorrect ratio).
2. The correct ratio.
1 2 3 4 5 EPS 10 6 7 8 9 10 A ROA ROE Debt Ratio B Incorrect: Correct: D E
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Incorrect Correct ROA Net Incomeaverage assets 1061005500006280002 106100589000 018 1061008700 550...Get Instant Access to Expert-Tailored Solutions
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