On December 31, 2009, 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, 2009, 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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The Answer of On December 31, 2009, 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, 2009, 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?

On December 31, 2009, Carlson Incorporated Had Total Liabilities of $60,000