Use the Following Information for Questions
Dexter, Inc -Assume That No Correcting Entries Were Made at December 31

question 79

Multiple Choice

Use the following information for questions
Dexter, Inc.is a calendar-year corporation.Its financial statements for the years 2007 and 2006 contained errors as follows: $$\begin{array} { l l l } &{ 2007 } & { 2006 }\\\text { Ending inventory } &{ \$ 3,000 \text { overstated } } & { \$ 8,000 \text { overstated } } \\\text { Depreciation expense } & \$ 2,000 \text { understated } & \$ 6,000 \text { overstated }\end{array}$$
-Assume that no correcting entries were made at December 31, 2006.Ignoring income taxes, by how much will retained earnings at December 31, 2007 be overstated or understated?

• A)$1,000 understated
• B)$5,000 overstated
• C)$5,000 understated
• D)$9,000 understated

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