The ending inventory for Elm Co. was incorrectly adjusted, which caused it to be understated by \(\$ 12,500\) for 2011.
Required
Was each of the following amounts overstated, understated, or not affected by the error?

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Item No. Year Amount 1 2011 Beginning inventory 2 2011 3 2011 4 2011 2011 6 2011 Net income 7 2012 8 2012 9 2012 1=2 10 2012 Purchases Goods available for sale Cost of goods sold Gross margin Beginning inventory Purchases Goods available for sale Cost of goods sold 11 2012 Gross margin 2012 Net income