After Preparing the Financial Statements for the Current Year, the Accountant

After preparing the financial statements for the current year, the accountant for Barbara's Jewel Co closed the dividends account at year-end by debiting Retained Earnings and crediting the dividends account. What is the effect of this entry on current-year profit and the balance in the equity account(s) at year-end?

A) Profit is overstated; balance in the retained earnings account is correct.
B) Profit is correct; balance in the share capital account is correct.
C) Profit is understated; balance in the share capital account is correct.
D) Profit is understated; balance in the retained earnings account is understated.