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 $573,000
Total Liabilities 210,000 217,000
Total Equity 340,000 356,000
Net Income for the Year 101,900
Common Shares Outstanding 22,000 22,000
You discovered that they have not adjusted for estimated bad debt expenses of $8,500. For each of the following ratios, calculate:
a. The ratio that would have resulted had the error not been discovered (i. e. the incorrect ratio).
b. The correct ratio.
1. ROE
2. ROA
3. Debit ratio
4. EPS
Answers: 3
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The accounting department of your company has just delivered a draft of the current year's financial...
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