C. Good Eyeglasses overstated its inventory by $30,000 at the end of 2018. In 2019, the discovery of this error, before adjusting or closing entries, would require:
A) An increase in retained earnings.
B) A debit to inventory of $30,000.
C) A prospective adjustment in the 2019 income statement.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

The effect of the 2018 error was an overstatement of net income and retained earnings. The beginning inventory of 2019 is overstated and thus cost of goods sold is overstated. In 2019, retained earnings would be debited for $30,000, and cost of goods sold would be credited for $30,000.

C Good Eyeglasses Overstated Its Inventory by $30,000 at the End