Jethroe Co. reported a retained earnings balance of $200,000 at December 1, year 4. In June year 5, Jethroe discovered that merchandise costing $50,000 had not been included in inventory in its year 4 financial statements. Jethroe has a 21% tax rate.

What amount should Jethroe report as adjusted beginning retained earnings in its statement of retained earnings at December 31, year 5?

Multiple Choice

• $150,000

• $189,500

• $200,000

• $239,500