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Buffalo Equipment Co. closes its books regularly on December 31, but at the end of 2017 it held its cash book open so that a more favorable balance sheet could be prepared for credit purposes. Cash receipts and disbursements for the first 10 days of January were recorded as December transactions. The information is given below.

1.

January cash receipts recorded in the December cash book totaled $53,400, of which $35,700 represents cash sales, and $17,700 represents collections on account for which cash discounts of $332 were given.2.

January cash disbursements recorded in the December check register liquidated accounts payable of $21,497 on which discounts of $250 were taken.3.

The ledger has not been closed for 2017.4.

The amount shown as inventory was determined by physical count on December 31, 2017.

The company uses the periodic method of inventory.

To what extent was Buffalo Equipment Co. able to show a more favorable balance sheet at December 31 by holding its cash book open? (Compute working capital and the current ratio.) Assume that the balance sheet that was prepared by the company showed the following amounts: (Round ratios to 2 decimal place, e.g. 4.56.)

Dr. Cr.

Cash $40,840

Accounts receivable 38,090

Inventory 60,450

Accounts payable $41,220

Other current liabilities 14,157

Per Balance Sheet After Adjustment

Working capital $

$

Current ratio

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