. Buffalo Inc. buys inventory items for $300 each and sells them for $400 each. During the year, the company bought and sold hundreds of these items. The company uses a perpetual system. One unit was sold near the end of the year. The recording was a debit to cash for $400, a credit to inventory for $300, and a credit to gain on sale of inventory for $100. No other entry or correction was made. Which of the following statements is true about Buffalos reported information for the period? a. Gross profit was correct, net income was overstated, and inventory was understated. b. Gross profit was understated, net income was understated, and inventory was correct. c. Gross profit was understated, net income was correct, and inventory was correct. d. Gross profit was correct, net income was understated, and inventory was overstated.