Question

Sheffield Suppliers reported cost of goods sold for 2017 of $690,000 and retained earnings of $1,250,000 at December 31, 2017. Sheffield later discovered that its ending inventories at December 31, 2016 and 2017, were overstated by $48,000 and $64,800, respectively. Determine the corrected amounts for 2017 cost of goods sold and December 31, 2017, retained earnings. COGS Retained Earnings Corrected amounts $enter a dollar amount $enter a dollar amount

Answer 1

Answer:

Adjusted COGS = $706,800

Adjusted retained earnings = $1,185,200

Explanation:

Opening stock + purchases - Closing stock = Adjustment needed to COGS

- 48,000 + 0 - (-64,800) = Adjustment needed to COGS

-48,000 + 64,800 = Adjustment needed to COGS

Adjustment needed to COGS = $16,800

Adjusted COGS = $690,000 + $16,800 = $706,800

Adjusted retained earnings = $1,250,000 - 64,800 = $1,185,200