Armstrong Inc. is a calendar-year corporation. Its financial statements for the years ended 12/31/12 and 12/31/13 contained the following errors:
2012 2013
Ending inventory $20,000 overstatement $32,000 understatement
Depreciation expense 8,000 understatement 16,000 overstatement
Assume that the 2012 errors were not corrected and that no errors occurred in 2011. By what amount will 2012 income before income taxes be overstated or understated?
A) $28,000 overstatement
B) $12,000 overstatement
C) $28,000 understatement
D) $12,000 understatement