Storm Windows Company understated their ending inventory during their first year of operations by $2,000

Storm Windows Company understated their ending inventory during their first year of operations by
$2,000. What is the effect of this error at the end of the year? Select all answers which apply.

$2,000 overstatement of net income.
$2,000 understatement of net income.
$2,000 overstatement of cost of goods sold.
$2,000 understatement of cost of goods sold.


Toy Mart has Inventory that was destroyed by fire. Apply the gross profit method to estimate their
ending inventory assuming! the following information.
Goods available at cost $75,000
Goods available at retail selling prices. $100,000
Goods sold at retail prices $60,000
Gross profit ratio 25%
Cost of ending Inventory ?

$30,000 
$15,000
$40,000