Powell Company had the following errors over the last two years:

2014:	Ending inventory was overstated by $58,500 while depreciation expense was overstated by $25,800
2015:	Ending inventory was understated by $9,500 while depreciation expense was understated by $7,400.

By how much should retained earnings be adjusted on January 1, 2016? (Ignore taxes)

Increase by $27,900.

Increase by $49,000.

Decrease by $32,800.

Decrease by $27,900.