At December 31, 2022, Dwight AG reported current assets of €390,000 and current liabilities of €200,000. The following items may have been recorded incorrectly. Dwight uses the periodic method.

1. Goods purchased costing €22,000 were shipped f.o.b. shipping point by a supplier on December 28. Dwight received and recorded the invoice on December 29, 2022, but the goods were not included in Dwight’s physical count of inventory because they were not received until January 4, 2023.

2. Goods purchased costing €20,000 were shipped f.o.b. destination by a supplier on December 26. Dwight received and recorded the invoice on December 31, but the goods were not included in Dwight’s 2022 physical count of inventory because they were not received until January 2, 2023.

3. Goods held on consignment from Kishi Ltd. were included in Dwight’s December 31, 2022, physical count of inventory at €13,000.

4. Freight-in of €3,000 was debited to advertising expense on December 28, 2022.

Instructions

a. Compute the current ratio based on Dwight’s statement of financial position.

b. Recompute the current ratio after corrections are made.

c. By what amount will income (before taxes) be adjusted up or down as a result of the corrections?