Detailed Answer
(b) The financial statements must be restated for all periods
presented with period-specific effects disclosed. Answer (a)
is incorrect because although beginning inventory may be adjusted,
prior years’ financial statements must also be restated.
Answer (c) is incorrect because correcting the balance of ending
retained earnings is not sufficient disclosure for error correction.
Answer (d) is incorrect because even though it is a self-correcting
error, financial statements must be restated with period-specific
effects of the error.