You are a forensic accountant working for a law firm that has been hired to investigate a company suspected of financial fraud. The company, a retailer, is accused of manipulating its inventory and financial statements to inflate its revenue and net income. Your task is to analyze the company's financial statements and inventory records and determine if any fraudulent activity has taken place.

Using the information provided, answer the following questions:

a) The company's financial statements for the year ending December 31, 2021, show a net income of $500,000. During your investigation, you find that the company has overstated its revenue by $50,000 by recording sales that were never made. Calculate the impact of the overstated revenue on the company's net income. (5 marks)

b) The company's inventory records show that it has $1,000,000 worth of inventory on hand at the end of the year. However, during your investigation, you find that a significant portion of the inventory is damaged and cannot be sold. After conducting a physical inventory count, you determine that the actual value of the inventory on hand is only $750,000. Calculate the impact of the overstatement of inventory on the company's net income. (5 marks)

c) During your investigation, you discover that the company has understated its cost of goods sold (COGS) by $100,000 by failing to record certain expenses related to the production and transportation of goods. Calculate the impact of the understated COGS on the company's net income. (5 marks)

d) Based on your analysis, do you believe that financial fraud has taken place at the company? Explain your answer. (5 marks)