$5)$ During $2021,$ P Company discovered that the ending inventories reported on its financial statements were incorrect by the following amounts:

$\backslash$$$120,000$understated

P uses the periodic inventory system to ascertain year$-$end quantities that are converted to dollar amounts using the FIFO cost method. Prior to any adjustments for these errors and ignoring income taxes, P$\text{'}$s retained earnings at January $1,2021,$ would be:

A$)$ Correct.

B$)\backslash (\backslash$$ $30,000\backslash )$ overstated.

C$)\backslash (\backslash$$ $150,000\backslash )$ overstated.

D$)\backslash (\backslash$$ $270,000\backslash )$ overstated.