In 20x4, ESD Ltd. discovered that $10,000 of equipment purchased on January 20x1 was expensed in full. The equipment has a ten-year life, has no residual value, and should have been depreciated on the straight-line basis. The error is corrected. As a result, the comparative 20x3 and 20x4 financial statements will show what amounts as adjustments to the beginning balances of retained earnings dated January 1, 20X3 and 20X4 respectively:

Select one:

a. 20X3 add $7000 and 20X4 add $7000.

b. 20X3 add $8000 and 20x4 add $7000

c. 20X3 add $8000 and 20X4 add Nil.

d. 20X3 add nil and 20X4 add $7000.