2020 $254000 overstated $200000 overstated 2021 121000 understated 79500 understated Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2020, or at December 31, 2021. Ignoring income taxes, by how much should Sheridan's retained earnings be retroactively adjusted at January 1, 2022

$241,500 (Understated)

Explanation:

Calculation for how much should Sheridan's retained earnings be retroactively adjusted at January 1, 2022

Retained earnings = $121,000 (Understated) + $200,000 (Understated) - $79,500 (Overstated)

Retained earnings = $241,500 (Understated)

Therefore by how much should Sheridan's retained earnings be retroactively adjusted at January 1, 2022 will be $241,500 (Understated)

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