Tarleton Company Discovered Ending Inventory Errors in 2017 and 2018

question 6

Multiple Choice

Tarleton Company discovered ending inventory errors in 2017 and 2018. The 2017 ending inventory was overstated by $215,000 whereas the 2018 ending inventory was understated by $85,000. Ignoring income tax effects, by what amount should the beginning retained earnings be adjusted on January 1, 2019?

• A) $85,000 debit
• B) $85,000 credit
• C) $130,000 debit
• D) $215,000 credit

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