At the end of 20A, a $2,500 understatement was discovered in the amount of the 20A ending inventory as reflected in the perpetual inventory records. What were the 20A effects of the $2,500 inventory error (before correction)?

A. Cost of goods sold was understated by $2,500 and pretax profit was understated by $2,500.

B. Cost of goods sold was overstated by $2,500 and pretax profit was overstated by $2,500.

C. Assets (inventory) were understated by $2,500 and pretax profit was understated by $2,500.

D. Assets (inventory) were understated by $2,500 and pretax profit was overstated by $2,500.