Question $50$

$1$ pts

During $2024,$ CVS Pharmacies discovered that the ending inventories reported on its financial statements were incorrect by the following amounts:

$2022$: $$5,460,000$ overstated

$2023$: $$6,826,000$ understated

CVS uses the periodic inventory system to ascertain year$-$end quantities that are converted to dollar amounts using the weighted$-$average cost method. Prior to any adjustments for these errors and ignoring income taxes, CVS$\text{'}$ Retained Earnings on January $1,2024,$ would be:

$$ $$6,826,000$ overstated.

$$ $$1,378,000$ overstated.

$$ $$1,378,000$ understated.

$$6,826,000$ understated.