Question

Novak Enterprises reported cost of goods sold for 2020 of $1,338,800 and retained earnings of $5,268,500 at December 31, 2020. Novak later discovered that its ending inventories at December 31, 2019 and 2020, were overstated by $114,680 and $34,830, respectively.
etermine the corrected amounts for 2020 cost of goods sold and December 31, 2020, retained earnings

Answer 1

Answer:

$1,258,950 and $5,233,670

Explanation:

The computation is shown below:

For cost of goods sold

= Cost of goods sold - beginning inventory overstated + ending inventory overstated

= $1,338,800 - $114,680 + $34,830

= $1,258,950

Since the ending inventory contains the lesser amount so it would be added and the beginning inventory contains larger amount so it would be deducted

For retained earning

= Retained earning - ending inventory

= $5,268,500 - $34,830

= $5,233,670