Use the Following Information to Solve the Following Questions:
Shanti

question 127

Multiple Choice

Use the following information to solve the following questions:
Shanti Inc. is a calendar-year corporation. Its financial statements for the years 2020 and 2019 contained errors as follows:
$$\begin{array} { l l l } &2020&2019\\\text { Ending inventory } & \$ 6,000 \text { overstated } & \$ 16,000 \text { overstated } \\\text { Depreciation experse } & \$ 4,000 \text { understated } & \$ 12,000 \text { overstated }\end{array}$$
-Assume that no correcting entries were made at December 31, 2019. Ignoring income taxes, by how much will retained earnings at December 31, 2020 be overstated or understated?

• A) $2,000 understated
• B) $18,000 understated
• C) $10,000 overstated
• D) $18,000 overstated