If Taylor Corp $\begin{array}{cc}\text { Effect on 2018 Net Income } & \text { Effect on 2017 Net Income } \\\end{array}$

Short Answer

If Taylor Corp.understates its ending inventory balance for 2017 by $15,500 and it is not corrected,what are the effects on its net income for 2018 and 2017?
$\begin{array}{cc}\text { Effect on 2018 Net Income } & \text { Effect on 2017 Net Income } \\\end{array}$
a. $\begin{array}{cc} \text { Overstated by } \$ 15,500 && \text { Understated by } \$ 15,500 \\\end{array}$
b. $\begin{array}{cc}\text { Understated by } \$ 15,500 && \text { Overstated by } \$ 15,500 \\\end{array}$
c. $\begin{array}{cc}\text { Understated by } \$ 15,500 && \text { No effect } \\\end{array}$
d. $\begin{array}{cc}\text { Overstated by } \$ 15,500 &&& \text { No effect }\end{array}$