A company understated its ending inventory in Year 1 by $25,000 and also overstated its ending inventory in Year 2 by $30,000. Neither error was discovered until Year 3. As a result, of these two errors, retained earning for Year 2 was:

Group of answer choices

Understated by $5,000.

Understated by $25,000.

Overstated by $30,000.

Overstated by $55,000.