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Problem - Effects of errors on financial statements - For a recent year, the balance sheet for The Campbell Soup Company (CPB) includes accrued expenses of $604 million. The income before taxes for Campbell for the year was $849 million.
Required -
a. Assume the adjusting entry for $604 million of accrued expenses was not recorded at the end of the year. By how much would income before taxes have been misstated?
b. What is the percentage of the misstatement in (a) to the reported income of $849 million? Round to one decimal place.
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