ABC began operations on January 1, 2019. Its financial statements contained the following errors: The 2019 ending inventory was overstated by $ 4870.4 but the 2020 ending inventory was accounted for correctly. Also, on December 31, 2020, fully depreciated equipment was sold for $ 7,993.8 (book value = $ 0), however, the sale was not recorded. No entries were made to correct these errors and the temporary accounts for 2020 have already been closed. Ignoring any tax effect, the total effect of these errors on the balance of retained earnings as of December 31, 2020 is

Select one:

a. Overrated by $ 12,864.

b. underrated by $ 7993.8.

c. Overrated by $ 7993.8.

d. underrated by $ 12,864.