There is no effect of a $44000 overstatement of last year's inventory on current years ending retained earning balance.
Overstating inventory is reported amount for the cost of a company's inventory which is greater than the actual true cost. Thus, overstating the ending inventory will affect a business's income statement.
Thus, when ending inventory is overstated it causes current assets, retained assets, and retained earnings to also be overstated. So, that is the reason there is no effect of a $44000 overstatement of last year's inventory on current years ending retained earning balance.
Hence, when inventories are overstated it lowers the cost of goods sold.
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