During the current year, Company discovered it had overstated sales in the prior year. How should Co. handle this issue? (Select from the option)

D) Restate the prior year financial statements presented for comparative purposes

It should be D, spreading the previous years sales adjustments to future periods is like doing the same mistake again. 

D) is correct answer. Only prior year's comparative figures should be corrected / restated.

B) Adjust current sales for the entire adjustment.

Corrections of errors in prior period financial statements that are related to items of profit or loss in prior periods are accounted for as prior-period adjustments, and they are reported on the statement of retained earnings as an adjustment to beginning retained earnings.

This means that the journal entry will consist of a Dr/Cr to Retained Earnings and an opposite Dr/Cr to the asset or liability account that was affected by the error.

Answer A; Spread the adjustment over current and future periods.