Question

Blossom Enterprises reported cost of goods sold for 2020 of $1,517,400 and retained earnings of $5,576,300 at December 31, 2020. Blossom later discovered that its ending inventories at December 31, 2019 and 2020, were overstated by $105,590 and $36,540, respectively. Determine the corrected amounts for 2020 cost of goods sold and December 31, 2020, retained earnings.

Answer 1

Answer:

$1,448,350 ;  $5,539,760        

Explanation:

The corrected amount is as follows

For cost of goods sold

= Reported cost of goods sold - overstated value of ending inventory in year 2019 + overstated value of ending inventory in year 2020

= $1,517,400 - $105,590 + $36,540

= $1,448,350    

For retained earnings

= Reported retained earning -  overstated value of ending inventory in year 2020

= $5,576,300 - $36,540

= $5,539,760