Question

Blue Enterprises reported cost of goods sold for 2020 of $1,307,500 and retained earnings of $5,383,000 at December 31, 2020. Blue later discovered that its ending inventories at December 31, 2019 and 2020, were overstated by $118,630 and $36,930, respectively. Determine the corrected amounts for 2020 cost of goods sold and December 31, 2020, retained earnings.

Answer 1

Answer: See explanation

Explanation:

Based on the information given in the question, the corrected amounts for 2020 cost of goods sold would be:

= $1307500 + $36930 - $118630

= $1225800

The corrected Retained earnings would be:

= $5,383,000 - $36,930

= $5,346,070