Powell Company Had the Following Errors Over the Last Two

question 55

Multiple Choice

Powell Company had the following errors over the last two years: 2011: Ending inventory was overstated by $30,000 while depreciation expense was overstated by $24,000.
2012: Ending inventory was understated by $5,000 while depreciation expense was understated by $4,000.
By how much should retained earnings be adjusted on January 1, 2013? (Ignore taxes)

• A)Increase by $15,000.
• B)Decrease by $25,000.
• C)Decrease by $6,000.
• D)Increase by $25,000.