During the taking of its physical inventory on December 31, 2010, Barry's Bike Shop incorrectly counted its inventory as $270,000 instead of the correct amount of $190,000. The effect on the balance sheet and income statement would be as follows:
A) assets overstated by $80,000;retained earnings understated by $80,000; net income statement understated by $80,000.
B) assets overstated by $80,000;retained earnings understated by $80,000; no effect on the income statement.
C) assets and retained earnings overstated by $80,000; net income overstated by $80,000;.
D) assets and retained earnings overstated by $80,000; net income understated by $80,000.
C
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