Berkshire Inc. uses a periodic inventory system. At the end of 2010, it missed counting some inventory items, resulting in an inventory understatement by $600,000. Assume that Berkshire has a 30% income tax rate and that this was the only error it made. 68. If undetected, what is the effect of this error on Berkshire's 12/31/2010 balance sheet? A. Assets understated by $600,000 and shareholders' equity understated by $600,000. B. Assets understated by $420,000 and shareholders' equity understated by $420,000. C.Assets understated by $600 ,000, liabilities understated by $180,000 and shareholders' equity understated by $420,000. D. None of the above is correct. 69. If undetected, what is the effect of the error on Berkshire's 2011 income statement? A. Net income is understated by $420,000. B. Cost of goods sold is understated by $420,000. C. There are no errors in the 2011 income statement. D. None of the above is correct. 70. If undetected, what is the effect of the error on Berkshire's 12/31/2011 balance sheet? A. There are no errors in the 12/31/2011 balance sheet. B. Assets understated by $600,000 and shareholders' equity understated by $600,000. C. Assets understated by $420,000 and shareholders' equity understated by $420,000. D. Liabilities understated by $180,000 and shareholders' equity overstated by $420 ,000