· Inventory errors, whether due to human error or deliberate manipulation, can significantly distort a company's financial statements. Let's analyze the potential impact of inventory errors on the financial statements of Ruby Gemstone Inc., a high-end jewelry retailer. If ending inventory is overstated by $20,000, calculate the effect on the cost of goods sold, gross profit, and net income. Conversely, if ending inventory is understated by 10%, determine the resulting adjustments to the cost of goods sold, gross profit, and net income. Utilize the company's sales revenue of $600,000 and its original ending inventory of $150,000 to perform these calculations.