The current assets and current liabilities sections of the balance sheet of Blue Company appear as follows.

The following errors in the corporation's accounting have been discovered:

January $2026$ cash disbursements entered as of December $2025$ included payments of accounts payable in the amount of

$$43,400,$ on which a cash discount of $2\%$ was taken.

The inventory included $$30,790$ of merchandise that had been received at December $31$ but for which no purchase invoices

had been received or entered. Of this amount, $$10,860$ had been received on consignment; the remainder was purchased

fo$.$b$.$ destination, terms $\frac{2}{10},\frac{n}{30}.$

Sales for the first four days in January $2026$ in the amount of $$29,350$ were entered in the sales journal as of December $31,$

$2025.$ Of these, $$21,600$ 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 $$37,480.$ Of this

amount, $$25,480$ was received on account after cash discounts of $2\%$ had been deducted; the remainder represented the

proceeds of a bank loan.

$($a$)$

Your answer is correct.

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.$)$

$($b$)$

Your answer is incorrect.

State the net effect of your adjustments on Blue Company's retained earnings balance.