Tang, IncSells Collectible Jewelry on Consignment from Various Manufacturers

Multiple Choice

Tang, Inc.sells collectible jewelry on consignment from various manufacturers.Additionally, Tang sells its own line of specialty jewelry manufactured in-house.On December 31, 2011, during Tang, Inc 's annual inventory count, an inexperienced new staff member included in Tang's ending inventory $350,000 worth of inventory held on consignment from Metcalf Associates.Which of the following is correct regarding the impact of this error on Tang's income statement and statement of financial position at December 31, 2011?

A) Ending inventory is understated by $350,000.
B) Retained earnings is overstated by $350,000.
C) Cost of goods sold is overstated by $350,000.
D) The financial statements are correctly stated.