
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
I need to gain understanding for an exam. Can you please provide me with ALL the steps for completing this problem. I know the ROA is net income / total assets however, I am getting it wrong.. Please help.

Transcribed Image Text: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
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