Intermediate Accounting I

3. Taoos Inc. erroneously omitted $30,000 of salary expense from its 2019 income statement. The error was discovered in 2020, after the 2019 books had already been closed. What should Taoos Inc. do to correct the error?

a) Record an additional $30,000 of salary expense in 2020.

b) Credit 2020 retained earnings for $30,000

c) Debit 2020 retained earnings for $30,000

d) Debit 2020 retained earnings for $24,000 ($30,000 net of 20% income tax).