Use the Following Information for Questions

question 29

Multiple Choice

Use the following information for questions.
On January 2, 2015, Beaver Corp.purchased machinery for $135,000.The entire cost was incorrectly recorded as an expense.The machinery has a nine-year life and a $9,000 residual value.Beaver uses straight-line depreciation for all its plant assets.The error was not discovered until May 1, 2017, and the appropriate corrections were made.Ignore income tax considerations.
-Before the corrections were made, retained earnings was understated by

• A)$135,000.
• B)$121,000.
• C)$107,000.
• D)$93,000.

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