Question: 1 . Creditor Co . includes a loan covenant requiring Debtor Co . to maintain a current ratio of at least 1 . 5 0

1. Creditor Co. includes a loan covenant requiring Debtor Co. to maintain a current ratio of at least 1.50 at the end of each year of the life of the loan. At the end of 2023, Debtor Co.s current ratio is 1.70, but before the audit is completed Borrower Co. reports final adjusting entries that decrease the current ratio to 1.52. What impact will these adjusting entries likely have on the audit?

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