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Black, Inc. is a calendar-year corporation whose financial statements for 2010 and 2011 included errors as follows:

Year            Ending Inventory           Depreciation Expense
2010           $162,000 overstated     $135,000 overstated
2011               54,000 understated       45,000 understated

Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2010, or at December 31, 2011. Ignoring income taxes, by how much should Black’s retained earnings be retroactively adjusted at January 1, 2012?

a.$144,000 increase b.$36,000 increase c.$18,000 decrease d.$9,000 increase