Happy House Corporation Reported Net Sales of $425,000 for the Current

Multiple Choice

Happy House Corporation reported net sales of $425,000 for the current year. After the financial statements had been prepared, it was discovered that ending inventory had been understated by $25,000. If the tax rate is 40%, after the error has been corrected, net income will:

A) increase by $25,000.
B) decrease by $25,000.
C) increase by $15,000.
D) decrease by $15,000.