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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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