At December 31, 2025, Stevenson Company overstated ending inventory by $36,000. How does this error affect cost of goods sold and net income for 2025?

a. Overstates cost of goods sold and understates net income

b. Understates cost of goods sold and overstates net income

c. Leaves both cost of goods sold and net income correct because the errors cancel each other

d. Overstates both cost of goods sold and net income