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State the net effect of your adjustments on Blue Company's retained earnings balance. Decrease v to retained earnings $ 1 1. 2. 4. January
State the net effect of your adjustments on Blue Company's retained earnings balance. Decrease v to retained earnings $ 1 1. 2. 4. January 2026 cash disbursements entered as of December 2025 included payments of accounts payable in the amount of $43,500, on which a cash discount of 2% was taken. The inventory included $31,970 of merchandise that had been received at December 31 but for which no purchase invoices had been received or entered. Of this amount, $10,290 had been received on consignment; the remainder was purchased f.o.b. destination, terms 2/10, n/30. Sales for the first four days in January 2026 in the amount of $30,560 were entered in the sales journal as of December 31. 2025. Of these, $21,170 were sales on account and the remainder were cash sales. Cash, not including cash sales, collected in January 2026 and entered as of December 31, 2025, totaled $33,756. Of this amount, $21,756 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan. Blue Company Balance Sheet (Partial) December 31, 2025 Cash $41,700 Accounts payable $65,040 Accounts receivable $96,400 Notes payable 70,200 Less: Allowance for doubtful accounts 7,080 89,320 $135,240 Inventory 177,510 Prepaid expenses 8,980 $317,510 The following errors in the corporation's accounting have been discovered: urrent Assets Cash Accounts Receivable Asset 97,430 41,184 Jess Allowance for Doubtful Accounts 7,080 i 90,350 nventory Prepaid Expenses Total Current Assets arrent Liabilities 167,220 8.980 307,734 Liabilities and Stockholders' Equity arrent Liabilities Accounts Payable Notes Payable fotal Current Liabilities: Liabilities and Stockholders' Equity (b) 130,220 58,200 188,420
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