Effect of inventory errors. On December 30. Year 1 . Warren Company received merchandise costing $1,000 and counted it in the December 3! listing of ail items on hand. The firm received an invoice on January 4, Year 2, when it recorded the acquisition as a Year 2 acquisition. It should have recorded the acquisition for Year 1. Assume that the firm never discovered the eiTor. Wanen Company uses a periodic inventory system. Indicate the effect (overstatement, understatement, none) on each of the following amounts (ignore income taxes):

a. Inventory, 12/31/Year 1

b. Inventory, 12/31/Year 2

c. Cost of goods sold. Year 1

d. Cost of goods sold. Year 2

e. Net income. Year 1

f. Net income. Year 2 g. Accounts payable. 12/31/Year 1 h. Accounts payable, 12/31/Year 2 i. Retained earnings, 12/31/Year 2

(Appendix)