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Problem 1: Declaration, Inc., is a calendar year corporation. Its financial statements for the years 20x2 and 20x1 contained errors as follows: 20x2 20x1 Ending inventory P1,000 understated P3,000 overstated Depreciation expense P800 understated P2,500 overstated 2. Assume that the proper correcting entries were made at December 31, 20x1. By how much will 20x2 income before income taxes be overstated or understated?
a. #200 understated.
b. P2,700 understated.
c. #500 overstated.
d. P3,200 understated.
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