USA How to Adjust Understated Inventory

[allen chang]

Hi,

I'd like to hear your advice on how to adjust understated beginning inventory value.

In my company's accounting book, the original beginning inventory is about $180,000. However, the actual beginning inventory value is about $1,700,000. (Don't ask me why it's so different. It was already like this when I started working for this company)

In order to adjust the balance, I was going to do this

Inventory (Debit) $1,520,000

Retained Earning (Credit) $1,520,000
​

However, it is going to affect our balance sheet, especially the equity section, by huge amount. Our equity structure is very simple and the net profit (loss) is only about ($600,000), so the impact will be huge.

Do you think there's a better way to handle this problem in a more strategic, yet legitimate way? Please give me your advice.