Question: 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.

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.

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d Increases by 25000 Explanation 1 Ending Inventory overstated as on 2011 y 30000 No effect Reason O... View full answer

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