Answer:
The corrected costs of goods sold is $1,444,580
The corrected retained earnings is $4,650,450
Explanation:
The implication of opening and closing inventories been overstated is that the cost of opening charged to costs of goods sold was much higher than it should have been while the cost of closing inventory deducted was more than should have been deducted,hence should the overstatement should now be added back.
The revised retained earnings is computed thus:
Costs of goods sold $1,515,400
add overstatement of closing inventory $36,850
less overstatement of opening stock ($107,670)
Corrected costs of goods sold $1,444,580
The corrected retained earnings
Retained earnings $4,687,300
less overstatement of closing inventories ($36,850)
Corrected retained earnings $4,650,450
