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2) On December 31, 20x1, the Veranda Company reported the following: Current Assets $ 100,000 Current Liabilities 50,000 Net Income 200,000 Year-end inventory was determined

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2) On December 31, 20x1, the Veranda Company reported the following: Current Assets $ 100,000 Current Liabilities 50,000 Net Income 200,000 Year-end inventory was determined by a physical count at December 31, 20x1. Company policies: The FIFO inventory method is used; the periodic inventory method is used. For the purchase of inventory: Shipping costs are treated as: Period costs The following transactions occurred at the end of the current fiscal year or at the beginning of the next fiscal year. Assume all transactions (for purchases and sales) are on account (not cash.) a) A transaction for the purchase of merchandise inventory: Terms: net 30; FOB Shipping Point Shipping Date: December 28, 20x1 I Arrival Date: January 3, 20x2 Cost of inventory: $ 5,000 Shipping costs: $ 350 Transaction recorded: January 3, 20x2 b) A transaction for the sale of merchandise inventory: Terms: net 30 FOB Destination Shipping Date: December 29, 20x1 Arrival Date: January 4, 20x2 Cost of Inventory: $ 3,000 Sale price: 5,500 Transaction recorded: December 29, 20x1 cl Merchandise was sent, on consignment to a sales representative: Shipping Date: December 23, 201 Arrival Date: December 26, 20x1 Cost of inventory S 2,200 2) (continued) d] A transaction for the purchase of merchandise inventory: Terms: 2/10, net 30; FOB Destination Shipping Date: December 30, 20x1 Arrival Date: January 5, 20x2 Cost of inventory: $ 2,700 Shipping costs: s 225 Transaction recorded January 5, 20x2 e] A transaction for the sale of merchandise inventory: Terms: 2/10, net 30; FOB Shipping Point Shipping Date: December 30, 20x1 1 Arrival Date: January 6, 20x2 Cost of Inventory: $ 4,200 Sale price: $ 6,100 Transaction recorded: December 30, 20x1 REQUIRED Determine the following: 1) The working capital ratio before the errors were discovered. 2) The corrected amount of current assets at December 31, 20x1. 3) The corrected amount of current liabilities at December 31, 20x1. 4) The working capital ratio after the errors were discovered. 5) The corrected amount of net income for the year ended December 31, 20x1

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