1) Janes Company incorrectly omitted $50,000 of merchandise from its 2010 ending inventory. In addition, a merchandise purchase of $20,000 was incorrectly recorded as $2,000 in the purchases account. As a result of these errors, 2010 income (before taxes) is:

a) overstated by $32,000.

b) understated by $32,000.

c) overstated by $68,000

d) understated by $68,000.