Practice Exercise 5-02 The current assets and current liabilities sections of the balance sheet of Sheridan Co. appear as follows. Cash Accounts receivable Less: Allowance for doubtful accounts Inventory Prepaid expenses Total current assets Sheridan Co. Balance Sheet (Partial) As of December 31, 2017 $18,100 Accounts payable $39,100 Notes payable 2,400 36,700 Unearned revenue 61,600 Total current liabilities 7,400 $123,800 $27,500 13,300 3,300 $44,100 The following errors in the corporation's accounting have been discovered: 1. 2. Keane collected $3,600 on December 20, 2017 as a down payment for services to be performed in January, 2018. The company's controller recorded the amount as revenue. The inventory amount reported included $4,500 of merchandise that had been received on December 31, 2017 but for which no purchase invoices had been received or entered. Of this amount, $1,100 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30. Sales for the first day in January 2018 in the amount of $11,500 were entered in the sales journal as of December 31, 2017. Of these, $6,000 were sales on account and the remainder were cash sales. Cash, collected in December 2017, but entered as received in January 2018 totaled $3,000. Of this amount, $2,744 was received on account after cash discounts of 2% had been deducted; the remainder was collected for cash sales. Cash of $4,500 received in January 2018 was entered as received in December 2017. This cash represented the proceeds of a bank loan that matures in July 2018. January 2018 cash disbursements entered as of December 2017 included payments of accounts payable in the amount of $6,000, on which a cash discount of 1% was taken. 5. 6. Restate the current assets and current liabilities sections of the balance sheet in accordance with good accounting practice. (Assume that both accounts receivable and accounts payable are recorded gross.) (List Current Assets in order of liquidity.) SHERIDAN COMPANY Balance Sheet (Partial) Asset Liabilities and Stockholders' Equity State the net effect of your adjustments on Sheridan's retained earnings balance. to retained earnings $ Click if you would like to Show Work for this question: Open Show Work