Based upon the following data, estimate the cost of ending inventory using the gross profit method. Sales $868,000 Estimated gross profit rate 35% $71,200 Beginning inventory Purchases (net) Merchandise available for sale 746,900 $818,100 During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly counted its inventory as $207,415 instead of the correct amount of $168,809. The effect on the balance sheet and income statement would be Oa assets overstated by $38,606; retained earnings understated by $38,606; and net income statement understated by $38,606 Ob. assets overstated by $38,606; retained earnings understated by $38,606; and no effect on the income statement Oc assets, retained earnings, and net income all overstated by $38,606 Od assets and retained earnings overstated by $38,606; and net income understated by $38,606