During the Taking of Its Physical Inventory on December 31

Multiple Choice

During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly counted its inventory as $350,000 instead of the correct amount of $280,000. The effect on the balance sheet and income statement would be as follows:

A) assets overstated by $70,000;retained earnings understated by $70,000; net income statement understated by $70,000.
B) assets overstated by $70,000;retained earnings understated by $70,000; no effect on the income statement.
C) assets and retained earnings overstated by $70,000; net income overstated by $70,000.
D) assets and retained earnings overstated by $70,000; net income understated by $70,000.