AM Beauty Inc. is a calendar-year corporation. Its financial statements for the years 2026 and 2025 contained errors as follows: 2026 2025 Ending inventory $12,000 overstated $25,000 overstated What will be the impact on the 2025 financial statements? Will these items be overstated or understated and by how much? a. Cost of goods sold b. Income before taxes c. Retained earnings

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