During the year 1 year-end physical inventory count at Tequesta Corporation, $40,000 worth of inventory was counted twice. Assuming the year 2 year-end inventory was correct, the result of the year 1 error was that

Question options:

A)	Year 1 retained earnings was understated, and year 2 ending inventory was correct.

B)	Year 1 cost of goods sold was overstated, and year 2 income was understated.

C)	Year 1 income was overstated, and year 2 ending inventory was overstated.

D)	Year 1 cost of goods sold was understated, and year 2 retained earnings was correct.