Effect of inventory errors. Warren Company uses a FIFO cost-flow assumption and calculate Cost of Goods Sold as Beginning Inventory + Purchases — Ending Inventory. It uses a physical count of merchandise on hand to determine the balance in Ending Inventory. On December 30, 2008, Warren Company received merchandise from a supplier and placed that merchandise in its merchandise warehouse. Warren Company included merchandise its December 31, 2008 physical count of inventory. Although Warren Company had not yet received the invoice for this merchandise it knew the cost was $1,000 from the purchase order confirmation provide by the seller. When the firm received actual invoice on January 4, 2009, it recorded the merchandise purchase. In summary, Warren Company received merchandise in December 2008, included the merchandise its physical count of Ending Inventory at the end of December 2008 but made no journal entry in December to record the purchase of the inventory. Instead, the firm recorded merchandise purchase in January 2009. Assume that the firm never discovered its error. Indicate the effect (overstatement (OS), understatement (US), none (NO)) on each of following amounts (ignore income taxes):

a. Inventory, 12/31/2008.

b. Inventory, 12/31/2009.

c. Cost of goods sold, 2008.

d. Cast of goods sold, 2009.

e. Net income, 2008.

f. Net income, 2009.

g. Accounts payable, 12/31/2008.

h. Accounts payable, 12/31/2009.

i. Retained earnings, 12/31/2009.