At the end of Year 1, ABC Inc.'s inventories were overstated by $10,000.At the end of Year 2 its inventories were overstated by $20,000.Assuming that ABC Inc.is subject to a 20% tax rate, the effect of these overstatements on the company's Year 2 ending Retained Earnings would be an:
A) Overstatement of $24,000.
B) Overstatement of $30,000.
C) Overstatement of $16,000.
D) Understatement of $16,000.
Correct Answer:
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