Question

# Concord Enterprises Ltd. reported cost of goods sold for 2017 of \$2.3 million and retained earnings...

Concord Enterprises Ltd. reported cost of goods sold for 2017 of \$2.3 million and retained earnings of \$4.2 million at December 31, 2017. Concord later discovered that its ending inventories at December 31, 2016 and 2017 were overstated by \$150,000 and \$49,000, respectively.

Determine the correct amounts for 2017 cost of goods sold and December 31, 2017 retained earnings.

 Corrected cost of goods sold \$ Corrected 12/31/17 retained earnings \$

Cost of goods sold reported for 2017 = \$2.3 million

Retained earnings reported for 2017 = \$4.2 million

Overstated ending inventory at December 31, 2016 = \$150,000

Overstated ending inventory at December 31, 2017 = \$49,000

Corrected cost of goods sold = Cost of goods sold reported for 2017 - Overstated ending inventory at December 31, 2016 + Overstated ending inventory at December 31, 2017

= 2,300,000 - 150,000 + 49,000

= \$2,199,000

Corrected 12/31/17 retained earnings = Retained earnings reported for 2017 - Overstated ending inventory at December 31, 2017

= 4,200,000 - 49,000

= \$4,151,000

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