Harold Company overstated its ending inventory by $15,000 at December 31, 2016.

Question

Harold Company overstated its ending inventory by $15,000 at December 31, 2016. It did not correct the error in 2017. As a result, Harold Company's stockholders' equity was: Overstated at December 31, 2016, and understated at December 31, 2017. Understated at December 31, 2017, and overstated at December 31, 2017 Overstated at December 31, 2016, and correctly stated at December 31, 2017 O Understated at December 31, 2010, understated at December 31, 2017 Understated at December 31, 2016, and correctly stated at December 31, 2018

Explanation / Answer

answer is

overstated at december 31,2016, and correctly stated at december 31, 2017

overstated at december 31,2016 because if the ending inventory is overstated cost of goods will be decreased then net income will be increased then net income added to the retained earning then after it will added to the equity so it will be overstated it will not impact on the 2017 equity so it will be correctly stated

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