Problem 8-6 The summary financial statements of Monty Ltd. on December 31, 2020, are as follows: MONTY LTD. Statement of Financial Position December 31, 2020 Assets Cash $8,000 Accounts and notes receivable 45,000 Inventory 79,000 Property, plant, and equipment (net) 125,000 $257,000 Liabilities and Shareholders' Equity Accounts and notes payable $62,000 Long-term debt 62,000 Common shares 60,000 Retained earnings 73,000 $257,000 The following errors were made by the inexperienced accountant on December 31, 2019, and were not corrected. 1. The inventory was overstated by $13,000. 2. A prepaid expense of $2,400 was omitted. (It was fully expensed in 2019.) 3. Accrued revenue of $2,500 was omitted. (It was recognized when cash was received in 2020.) 4. A supplier's invoice for $1,700 for purchases made in 2019 was not recorded until 2020. On December 31, 2020, there were further errors: 5. The inventory was understated by $17,000. 6. A prepaid expense of $750 was omitted. 7. Accrued December 2020 salaries of $1,800 were not recognized. 8. Unearned income of $2,300 was recorded in the 2020 revenue. Calculate the working capital, current ratio, and debt to equity ratio for Monty Ltd. based on the original SFP information provided above. (Round Current ratio and Debt-to-equity ratio to 2 decimal places, e.g. 52.75.) Working capital Current ratio to 1 Debt-to-equity ratio to 1 Calculate the corrected net income for 2020. Net income / (loss) Prepare a corrected SFP at December 31, 2020. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Monty Ltd. Statement of Financial Position Assets Unadj. Adj. Revised Total Assets Liabilities and Shareholders' Equity Liabilities and Shareholders' Equity Total Liabilities and Shareholders' Equity SHOW LIST OF ACCOUNTS Using the corrected data, recalculate the working capital and the ratios. (Round Current ratio and Debt-to-equity ratio to 2 decimal places, e.g. 52.75.) Working capital Current ratio to 1 Debt-to-equity ratio to 1 Problem 8-6 The summary financial statements of Monty Ltd. on December 31, 2020, are as follows: MONTY LTD. Statement of Financial Position December 31, 2020 Assets Cash $8,000 Accounts and notes receivable 45,000 Inventory 79,000 Property, plant, and equipment (net) 125,000 $257,000 Liabilities and Shareholders' Equity Accounts and notes payable $62,000 Long-term debt 62,000 Common shares 60,000 Retained earnings 73,000 $257,000 The following errors were made by the inexperienced accountant on December 31, 2019, and were not corrected. 1. The inventory was overstated by $13,000. 2. A prepaid expense of $2,400 was omitted. (It was fully expensed in 2019.) 3. Accrued revenue of $2,500 was omitted. (It was recognized when cash was received in 2020.) 4. A supplier's invoice for $1,700 for purchases made in 2019 was not recorded until 2020. On December 31, 2020, there were further errors: 5. The inventory was understated by $17,000. 6. A prepaid expense of $750 was omitted. 7. Accrued December 2020 salaries of $1,800 were not recognized. 8. Unearned income of $2,300 was recorded in the 2020 revenue. Calculate the working capital, current ratio, and debt to equity ratio for Monty Ltd. based on the original SFP information provided above. (Round Current ratio and Debt-to-equity ratio to 2 decimal places, e.g. 52.75.) Working capital Current ratio to 1 Debt-to-equity ratio to 1 Calculate the corrected net income for 2020. Net income / (loss) Prepare a corrected SFP at December 31, 2020. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Monty Ltd. Statement of Financial Position Assets Unadj. Adj. Revised Total Assets Liabilities and Shareholders' Equity Liabilities and Shareholders' Equity Total Liabilities and Shareholders' Equity SHOW LIST OF ACCOUNTS Using the corrected data, recalculate the working capital and the ratios. (Round Current ratio and Debt-to-equity ratio to 2 decimal places, e.g. 52.75.) Working capital Current ratio to 1 Debt-to-equity ratio to 1