The annual report of Prodimax Ltd. for fiscal year 2014 included the financial statements for fiscal year 2013, which were restated to reflect the effects of a fraudulent action by a former employee. The restated financial statements included the following items and their account balances:

Required:
1. Determine the balance of retained earnings for the year ending October 31, 2013, and prepare the shareholders€™ equity section of the statement of financial position as at October 31, 2013.
2. The company provided the following explanation for the prior- period error. Use the amounts shown in the €œAdjustment€ column below to reconstruct the journal entry that was prepared to record the effect of the alleged fraud on the identified financial statement accounts:
PRIOR- PERIOD ERROR
During fiscal 2014, management uncovered evidence of a misappropriation of certain assets (related to an alleged fraud by a former non- executive employee). As a result, management determined that certain costs, which previously had been included in the cost of inventories, should have been expensed. In addition, certain costs previously included in cost of goods sold have been reclassified as unusual items. Accordingly, the consolidated financial statements for the fiscal year ended October 31, 2013, have been restated as follows from the amounts previously reported:

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Share capital Retained eamings, beginning of year Net earnings Dividends declared Effect of prior-period error 7,375 74,494 8,467 3,108 593 Debit balance As Previously Reported $96,660 Adjustment Cost of sales Unusual items Income tax expense Net earnings Inventories Income taxes recoverable Retained earnings as at October 31, 2013 Retained earnings as at October 31, 2012 $(1,058) 1,173 (44) (71) (1.072) 408 (664) (593) As Restaterd $95,602 1.173 4,686 8,467 60,973 1,101 79.260 73,901 4,730 8,538 62,045 693 79,924 74,494