In 2018, ABC's accountant forgot to include merchandise that was in transit and whose terms were FOB-shipping point in the final inventory count. The merchandise in transit had a total cost of $ 8,358. The merchandise was received on January 15, 2019. The 2019 ending inventory was correctly counted for a total of $ 6,374. The company uses the periodic inventory method. Assuming the error was not discovered in either 2018 or 2019, what is the effect of the error on the balance of retained earnings as of 1/1/20? (ignore any tax effect), Select one: a. The balance is overestimated for 1984. b. The balance is overstated 8358. c. The balance is understated by 8358. d. The balance is underestimated for 1984. e. The balance is correct.