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: Total Assets Total Liabilities Total Equity Beginning of the Year $550,000 210,000 340,000 End of the Year $616,000 211,000 405,000 Net Income for the Year Common Shares Outstanding 119,000 121,000 21,000 You discovered that they have not adjusted for estimated bad debt expenses of $8.200. 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. Incorrect: Correct: 2 ROA 3 ROE 4 Debt Ratio 5 EPS

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: Total Assets Total Liabilities Total Equity Beginning of the Year $550,000 210,000 340,000 End of the Year $616,000 211,000 405,000 Net Income for the Year Common Shares Outstanding 119,000 121,000 21,000 You discovered that they have not adjusted for estimated bad debt expenses of $8.200. 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. Incorrect: Correct: 2 ROA 3 ROE 4 Debt Ratio 5 EPS

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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