Dimmu Company purchased a machine on January 1, 2021, at a cost of P 120.000. An additional P 50.000 was spent for installation, but this amount was charged erroneously to Repairs Expense and not discovered until 2013. The machine has a useful life of five years and a salvage value of P 20.000. As a result of the error,
a. retained earnings at December 31, 2022, was understated by P 30,000, and 2022 income was overstated by P 6,000.
b. retained earnings at December 31, 2022, was understated by P 38,000, and 2022 income was overstated by P 6,000.
c. 2021 income was understated by P 50,000.
d. retained earnings at December 31. 2022, was understated by P 30,000, and 2022 income was overstated by P 10,000.