Blue Spruce Limited makes the following errors during the current year. Each error is an independent case.

1.		Ending inventory is overstated by $1,090, but purchases are recorded correctly.
2.		Both ending inventory and a purchase on account are understated by the same amount. (Assume this purchase of $1,560 was recorded in the following year.)
3.		Ending inventory is correct, but a purchase on account was not recorded. (Assume this purchase of $870 was recorded in the following year.)

Indicate the effect of each error on working capital, current ratio (assume that the current ratio is greater than 1), retained earnings, and net income for the current year and the following year. (Do not leave any answer field blank. Enter 0 for amounts.)

				Current Year					Subsequent Year
1.		Working capital		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount
		Current ratio		select an effect No effectOverstatedUnderstated					select an effect No effectOverstatedUnderstated
		Retained earnings		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount
		Net income/(loss)		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount
2.		Working capital		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount
		Current ratio		select an effect No effectOverstatedUnderstated					select an effect No effectOverstatedUnderstated
		Retained earnings		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount
		Net income/(loss)		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount
3.		Working capital		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount
		Current ratio		select an effect No effectOverstatedUnderstated					select an effect No effectOverstatedUnderstated
		Retained earnings		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount
		Net income/(loss)		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount		select an effect No effectOverstatedUnderstated by		$	enter a dollar amount

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