ABC Company discovered the following errors:

2020

2021

Merchandise Inventory, end

10,000 overstated

8,000 understated

Advances to suppliers were recorded as purchases but the merchandise was received in the following year

20,000

40,000

Advances from customers recorded as sales but the goods were delivered in the following year

20,000

70,000

Purchase of equipment had been charged to expense on January 1, 2020. Equipment have a useful life of 5 years.

100,000

-

On January 1, 2020, an equipment costing P40,000 was sold for P20,000. At the date of sale, the equipment had an accumulated depreciation of P15,000. All the cash received was recorded as income in 2020.

What is the total effect of the errors in 2021 net income?

a. Overstated by 8,000

b. Overstated by 38,000

c.

Overstated by 68.000

d. Overstated by 32.000