4. Evaluate each inventory error and determine whether it overstates or understates each item. Inventory Error Cost of Goods Sold Net Income Understate beginning inventory Understate ending inventory Overstate beginning inventory Overstate ending inventory 5. A company's sore was destroyed by a fire on February 10. The only information that could be salvaged included the following: Inventory, January 1: $34,000 Purchases: $118,000 Sales: $140,000 Gross Profit Rate: 30% Calculate the estimated value of the destroyed inventory. 10 10