Question

Sunland Enterprises reported cost of goods sold for 2020 of $1,397,500 and retained earnings of $5,157,300 at December 31, 2020. Sunland later discovered that its ending inventories at December 31, 2019 and 2020, were overstated by $105,370 and $31,500, respectively. Determine the corrected amounts for 2020 cost of goods sold and December 31, 2020, retained earnings. Corrected cost of goods sold $enter a dollar amount Corrected 12/31/20 retained earnings $enter a dollar amount

Answer 1

See below

Step-by-step explanation:

Corrected amount for 2020 cost of goods sold

= 2020 Cost of goods sold - 2019 Ending inventory + 2020 Ending inventory

= $1,397,500 - $105,370 + $31,500

= $1,323,630

Corrected December 31, 2020, amount for retained earnings

= 2020 Retained earnings - 2020 Ending inventory

= $5,157,300 - $31,500

= $5,125,800