During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly counted its inventory as $209,523.00 instead of the correct amount of $180,225.00. What would be the effect on the balance sheet and income statement?

Select the correct answer.

a.

assets overstated by $29,298.00; retained earnings understated by $29,298.00; net income statement understated by $29,298.00.

b.

assets overstated by $209,523.00; retained earnings understated by $180,225.00; no effect on the income statement.

c.

assets and retained earnings overstated by $29,298.00; net income overstated by $29,298.00.

d.

assets and retained earnings overstated by $180,225.00; net income understated by $209,523.00.