The September 30, 2011, Physical Inventory of Baxter Corporation Appropriately

Multiple Choice

The September 30, 2011, physical inventory of Baxter Corporation appropriately included $3,800 of merchandise purchased on account that was not recorded in purchases until October 2011. What effect will this error have on September 30, 2011, assets, liabilities, retained earnings, and earnings for the year then ended, respectively?

A) Understate; no effect; overstate; overstate
B) No effect; overstate; understate; understate
C) No effect; understate; overstate; overstate
D) No effect; understate; understate; overstate