The James Corporation sells music systems. Each system costs the company $100 and is sold for $250. During Year One, the company sold 1,000 music systems ($250,000 in total). Every customer also paid $10 each ($10,000 in total) for a one-year warranty. The company expects 5 percent of the music systems to break and cost $40 each to fix. None break in Year One, but unfortunately, the systems were not well-manufactured, and 300 break in Year Two and cost $70 each to fix. What is the impact of this extended warranty on James's reported net income for Year Two? Decrease of $18,000 Decrease of $21,000 O Decrease of $11,000 Decrease of $10,000 Watkins Inc. has the following assets at the end of Year One: Cash, $400; Inventory, $730; Prepaid Rent, $460; Equipment (net book value), $4,000. Watkins also has the following liabilities at the end of Year One: Accounts Payable, $560; Rent Payable, $200; Note Payable, due on June 1, Year Four, $3,500. At the end of Year One, what is Watkins's current ratio? 1.31 to 1.0 2.09 to 1.0 1.49 to 1.0 1.00