At December 31, 2024, Stacy McGill Corporation reported current assets of $370,000 and current liabilities of $200,000. The following items may have been recorded incorrectly. McGill uses a perpetual inventory system.

1. Goods purchased costing $22,000 were shipped f.o.b. shipping point by a supplier on December 28. McGill received and recorded the invoice on December 29, 2024, but the goods were not included in McGills inventory because they were not received until January 4, 2025.

2. Goods purchased costing $15,000 were shipped f.o.b. destination by a supplier on December 26. McGill received and recorded the invoice on December 31, but the goods were not included in McGills 2024 inventory because they were not received until January 2, 2025.

3. Goods held on consignment from Claudia Kishi Company were included in McGills December 31, 2024, inventory at $13,000.

Instructions

a. Compute the current ratio based on McGills balance sheet.

b. Recompute the current ratio after corrections are made.

c. By what amount will income (before taxes) be adjusted up or down as a result of the corrections?