On December 31, 2017, Carlson Incorporated Had Total Liabilities of $60,000

question 87

Essay

On December 31, 2017, Carlson Incorporated had total liabilities of $60,000 and total shareholders' equity of $100,000, resulting in a debt/equity ratio of 0.60 before warranty expense is recognized. On December 31, 2017, Carlson estimated warranty expense to be 5% of sales of $100,000. What is Carlson's debt/equity ratio after the warranty expense and related liability is recognized?

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Definitions:

Protective Pads

Items designed to safeguard specific parts of the body against injury, often used in contact sports or occupational settings.

Bed Alarm

A device used to monitor patients at risk of falling out of bed, alerting caregivers when a patient attempts to leave the bed.

Parasomnias

A category of sleep disorders that involve abnormal movements, behaviors, perceptions, and emotions during sleep, such as sleepwalking and night terrors.

Dyssomnias

A category of sleep disorders marked by difficulties in the amount, quality, or timing of sleep, including insomnia and sleep apnea.