The accounting department of your company has just delivered a draft of the current year's financial statements
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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 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.
Related Book For
Fundamentals of Financial Accounting
ISBN: 978-0078025914
5th edition
Authors: Fred Phillips, Robert Libby, Patricia Libby
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