Use the Following Information for the Following Questions:
Ignore

question 74

Multiple Choice

Use the following information for the following questions:
Ignore taxes.
Peach Inc.'s financial statements for the years 2019 and 2020 contained errors as follows:
$\begin{array}{c}\begin{array}{lll}\\\text {Ending inventory}\\\text { Depreciation Expense}\end{array}\begin{array}{c}\underline{2019}\\\text {\$ 3,000 \quad understated}\\\text {5,500 \quad overstated }\end{array}\begin{array}{c}\underline{2020}\\\text { \$ 5,000 \quad overstated}\\\text {3,500 \quad overstated}\end{array}\end{array}$

-Assuming that none of the errors were detected or corrected, by what amount will retained earnings at December 31, 2020 be overstated or understated?

• A) $4,000 understated
• B) $5,000 overstated
• C) $8,500 understated
• D) $11,500 understated

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Definitions:

Factory Workers

Individuals employed in manufacturing facilities responsible for operating machinery, assembling products, and performing other tasks related to production.

Factory Overhead

All indirect costs related to manufacturing, excluding direct labor and direct materials, required to operate the factory.

Product Cost

The total expense incurred to produce and deliver a product to the market, including materials, labor, and overhead costs.

Radio Commercial

An advertisement that is broadcasted on the radio to promote goods, services, or ideas to a wide audience.