Theta Apparel

• Theta Apparel is suspected of overstating its equity.
• The balance sheet shows $2,500,000 in equity.
• $300,000 in non-existent assets were included in equity.
• Liabilities were understated by $200,000.
• $100,000 in fictitious income was added to retained earnings.

Requirement: Calculate the correct equity value and describe the fraudulent activities detected.

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