During the taking of a physical inventory on December 31, 2012, inventory was counted as $100,870 instead of the correct amount of $100,780. The effect of the error on the December 31, 2012 balance sheet and income statement will be:

a.ending inventory will be understated; cost of merchandise sold will be overstated.

b.ending inventory will be overstated; net income will be overstated.

c.ending inventory will be understated; gross profit will be overstated.

d.ending inventory will be overstated; cost of merchandise sold will be overstated.