Reported Income for CXC Was Incorrect Due to Two Errors

Reported income for CXC was incorrect due to two errors.One error was the overstatement of ending inventory by $2,000.Which of the following errors,in combination with the inventory error,could cause income to be overstated by $2,500?

A) Purchases were understated by $4,500
B) Beginning inventory was understated by $500
C) A prepaid expense of $500 was capitalized
D) Accounts receivable was overstated by $4,500
E) Expenses were overstated $500

Correct Answer:

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