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

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.