Partial income statements for Murphy & Murphy (M & M) reported the following summarized amounts: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Net Sales $ 80,000 $ 79,000 $ 100,000 $ 88,000 Cost of Goods Sold 52,000 55,300 61,050 56,320 Gross Profit $ 28,000 $ 23,700 $ 38,950 $ 31,680 After these amounts were reported, M & Ms accountant determined the inventory at the end of Quarter 2 was understated by $3,950. The inventory balance at the end of the other three quarters was accurately stated.