After the financial statements were prepared for 2012, Wickham Ltd.discovered that an error had been made during the year-end inventory count and one room containing $40,000 worth of goods, at cost, had been missed.A review of the accounting records showed that all purchases had been recorded.The company's tax rate is 40%.If the error is not corrected, what is the effect of this error on 2013 closing retained earnings?
A)$16,000 overstated
B)$24,000 understated
C)$40,000 understated
D)No effect

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The Answer of After the financial statements were prepared for 2012, Wickham Ltd.discovered that an error had been made during the year-end inventory count and one room containing $40,000 worth of goods, at cost, had been missed.A review of the accounting records showed that all purchases had been recorded.The company's tax rate is 40%.If the error is not corrected, what is the effect of this error on 2013 closing retained earnings?
A)$16,000 overstated
B)$24,000 understated
C)$40,000 understated
D)No effect

After the Financial Statements Were Prepared for 2012, Wickham Ltd