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During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly counted its inventory as $216,128 instead of the correct amount

During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly counted its inventory as $216,128 instead of the correct amount of $177,542. The effect on the balance sheet and income statement would be

a.assets overstated by $38,586; retained earnings understated by $38,586; and net income statement understated by $38,586

b.assets overstated by $38,586; retained earnings understated by $38,586; and no effect on the income statement

c.assets, retained earnings, and net income all overstated by $38,586

d.assets and retained earnings overstated by $38,586; and net income understated by $38,586

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