Langley Company's December 31 year-end financial statements contained the following errors Dec Dec 31, 2020 31. 2021 $55,000 overstated Ending Inventory Depreciation expense $37,500 understated 10,000 understated An Insurance premium of $90,000 was prepaid in 2020 covering the years 2020, 2021, and 2002. The prepayment was recorded with a debit to insurance expense. In addition, on December 31, 2021, fully depreciated machinery was sold for $47,500 cash, but the sale was not recorded until 2022. There were no other errors during 2021 or 2022 and no corrections have been made for any of the error. Ignore income tax considerations. What is the total effect of the errors on the balance of Langley's retained earnings at December 31, 2021? Retained earings understated by $12,500 Retained earnings overstated by $17.500 Retained earnings understated by $50,000 Retained earnings understated by $22,500