At the end of the year, the company missed counting some units of inventory during the physical count. The Merchandise Inventory account was adjusted to agree to the count. As a result, the balance reported on the balance sheet was understated (was too low) by $20,000. Indicate how the Income statement was affected, if at all. HINT: Think about the entry for that inventory adjustment.

Was Cost of Goods Sold understated, overstated, or not affected? [ Select ] understated, overstated, not affected

Was Net Income understated, overstated, or not affected? [ Select ] understated, overstated, not affected