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The current assets and current liabilities sections of the balance sheet of Nash Company appear as follows. Nash Company Balance Sheet (Partial) December 31,

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The current assets and current liabilities sections of the balance sheet of Nash Company appear as follows. Nash Company Balance Sheet (Partial) December 31, 2025 Cash $47,800 Accounts payable $64,720 Accounts receivable $91,000 Notes payable 67,890 State the net effect of your adjustments on Nash Company's retained earnings balance. Less: Allowance for doubtful accounts 7,810 83,190 $132,610 Inventory 175,740 Decrease to retained earnings $ Prepaid expenses 9,770 $316,500 The following errors in the corporation's accounting have been discovered: 1. 2. 3. January 2026 cash disbursements entered as of December 2025 included payments of accounts payable in the amount of $44,100, on which a cash discount of 2% was taken. The inventory included $30,240 of merchandise that had been received at December 31 but for which no purchase invoices had been received or entered. Of this amount, $10,320 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 $31,880 were entered in the sales journal as of December 31, 2025. Of these, $22,420 were sales on account and the remainder were cash sales. 4. Cash, not including cash sales, collected in January 2026 and entered as of December 31, 2025, totaled $34,932. Of this amount, $22,932 was received on account after cash discounts of 2% had been deducted; the remainder represented the proceeds of a bank loan.

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