Please explain in detail, thank you Kentucky Enterprises purchased a machine on January 2, 2007, at a cost of $120,000. An additional $50,000 was spent for installation, but this amount was charged erroneously to repairs expense. The machine has a useful life of five years and a salvage value of $20,000. As a result of the error, a. retained earnings at December 31, 2008, was understated by $30,000 and 2008 income was overstated by $6,000. b. retained earnings at December 31, 2008, was understated by $38,000 and 2008 income was overstated by $6,000. c. retained earnings at December 31, 2008, was understated by $30,000 and 2008 income was overstated by $10,000. d. 2007 income was understated by $50,000.

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