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Question 5 of 6 - / 1 = 2 Presented below are the comparative income and retained earnings statements for Sheffield Inc. for the years 2020 and 2021. 2021 2020 Sales $352,000 $289,000 Cost of sales 215,000 150,000 Gross profit 137,000 139,000 Expenses 94,500 48,100 Net income $42,500 $90,900 Retained earnings (Jan. 1) $134,900 $68,500 Net income 42,500 90,900 Dividends (32,500) (24,500) Retained earnings (Dec. 31) $144,900 $134,900 The following additional information is provided: 1. In 2021, Sheffield Inc. decided to switch its depreciation method from sum-of-the-years' digits to the straight-line method. The assets were purchased at the beginning of 2020 for $92,000 with an estimated useful life of 4 years and no salvage value. (The 2021 income statement contains depreciation expense of $27,600 on the assets purchased at the beginning of 2020.) 2. In 2021, the company discovered that the ending inventory for 2020 was overstated by $23,700; ending inventory for 2021 is correctly stated. Prepare the revised retained earnings statement for 2020 and 2021, assuming comparative statements. (Ignore income taxes.) Prepare the revised retained earnings statement for 2020 and 2021, assuming comparative statements. (Ignore income taxes.) SHEFFIELD INC. Retained Earnings Statement For the Year Ended 2021 2020 Retained Earnings, January 1, unadjusted 134,900 Less Correction of Error for Inventory Overstatement 23.700 Retained Earnings, January 1, adjusted 111200 68,500 Add : Net Income Less : Dividends Retained Earnings, December 31 $ $