The ending inventory for Oak Co. was erroneously written down, causing an understatement of $6,500 at the end of Year 2.

Required
Was each of the following amounts overstated, understated, or not affected by the error?

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Item No. Year Amount Year 2 Year 2 Beginning inventory Purchases Year 2 Goods available for sale Cost of goods sold Gross margin 4 Year 2 Year 2 6. Year 2 Net income Year 3 Beginning inventory Purchases Year 3 Year 3 Goods available for sale 10 Year 3 Year 3 Cost of goods sold Gross margin 11 Year 3 12 Net income