Flint Suppliers reported cost of goods sold for 2017 of $880,000 and retained earnings of $1,230,000 at December 31, 2017. Flint later discovered that its ending inventories at December 31, 2016 and 2017, were overstated by $34,500 and $71,000, respectively. Determine the corrected amounts for 2017 cost of goods sold and December 31, 2017, retained earnings.

Question

Lilah Vega

Business

25 October, 04:48

Flint Suppliers reported cost of goods sold for 2017 of $880,000 and retained earnings of $1,230,000 at December 31, 2017. Flint later discovered that its ending inventories at December 31, 2016 and 2017, were overstated by $34,500 and $71,000, respectively. Determine the corrected amounts for 2017 cost of goods sold and December 31, 2017, retained earnings.

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Answers (1)

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Esmeralda · Answer 1

corrected amounts cost of goods sold = $916500

corrected amounts Retained Earnings = $1159000

Explanation:

given data

cost of goods sold = $880,000

retained earnings = $1,230,000

ending inventories 2016 = $34,500

ending inventories 2017 = $71,000

to find out

corrected amounts cost of goods sold and retained earnings

solution

we get here first corrected amounts for 2017 cost of goods sold will be here as

corrected amounts cost of goods sold = cost of goods sold - ending inventories 2016 + ending inventories 2017 ... 1

corrected amounts cost of goods sold = $880,000 - $34,500 + $71,000

corrected amounts cost of goods sold = $916500

and now we get corrected amounts Retained Earnings that will be as

corrected amounts Retained Earnings = retained earnings - ending inventories 2017

corrected amounts Retained Earnings = $1,230,000 - $71,000

corrected amounts Retained Earnings = $1159000