Company X failed to record (accrue) $5,000,000 of vendor invoices and warranty liability at year-end. With...

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Accounting

Company X failed to record (accrue) $5,000,000 of vendorinvoices and warranty liability at year-end. With this omission,the company's summary financial statements were stated as follows:Summarized Income Statement Sales $50,000,000 All Cost (incl.Interest & Taxes) $40,000,000 Net Income $10,000,000 SummarizedBalance Sheet This Year Last Year Assets: All Current Assetscombined $50,000,000 $40,000,000 All Long-Term Assets combined$50,000,000 $40,000,000 Total Assets: $100,000,000 $80,000,000Liabilities & Stockholders Equity All Current Liabilitiescombined $30,000,000 $25,000,000 All Long-Term Liabilities combined$25,000,000 $20,000,000 Stockholders Equity $45,000,000 $35,000,000Total Liabilities & Equity $100,000,000 $80,000,000 Answer thefollowing questions: Current Ratio per Company Statements? CurrentRatio if Statements Fixed This Error? Would the Current Ratio BeBetter or Worse? ROI per Company Statements? ROI if StatementsFixed This Error? Would the ROI be Better or Worse? ROE per CompanyStatements? ROE if Statements Fixed This Error? Would the ROE beBetter or Worse?

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3.7 Ratings (600 Votes)

Current Ratio as per the given financial statements Total Current AssetsTotal Current Liabilities 50000000030000000 167 Therefore current ratio as per the given financial statements is 167 If the Company records the accrue of 5000000 of vendor invoices as warranty expenses and warranty See Answer

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