q 13)

Falcon Co's financial statements for year 1 and year 2 include the following errors: Year 1 - Ending Inventory overstated by $36,000 & Depreciation Expense overstated by $30,000 Year 2 - Ending Inventory understated by $12,000 & Depreciation Expense understated by $10,000 Assuming that all purchases were correctly recorded and that there were no correcting entries made at Dec 31 year 1 or Dec 31 year 2, how much should Falcon Co's retained earnings be "retrospectively" adjusted at Jan 1 year 3? (ignore income taxes) O $2,000 increase 0 $4,000 decrease 0 $32,000 increase 0 $8,000 increase