The ending inventory for Carver Co. was incorrectly adjusted, which caused it to be understated by $15,300 for 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 1 Year 2 Beginning inventory 2 Year 2 Purchases 3 Year 2 Goods available for sale 4 Year 2 Cost of goods sold Gross margin Year 2 Year 2 6 Net income Year 3 Beginning inventory Purchases Goods available for sale 8 Year 3 9. Year 3 10 Year 3 Cost of goods sold Gross margin 11 Year 3 12 Year 3 Net income