X Company, a merchandiser, prepares monthly financial statements. On May 14, its accountant recorded a purchase of inventory on account as an increase in Inventories and a decrease in Retained Earnings. What would be the effect of this incorrect entry on the May 31 financial statements? a. Revenue was understated. b. Profit was understated. c. Accounts Receivable was overstated. d. Inventories were understated. e. Retained Earnings was overstated. f. Accounts Payable was overstated.