A companys beginning inventory for 2005 was overstated by $37,000, and the ending inventory for 2005 was understated by $16,000. The income tax rate for the company is 30%. These errors will cause the 2006 net income to be

a. Understated by $11,200. b. Understated by $25,900. c. Overstated by $11,200. d. Overstated by $25,900.

Please explain answer.