Effect of Errors in Physical Inventory Hydro White Water Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 2014, Hydro White Water incorrectly counted its inventory as $678,580 instead of the correct amount of $698,940. Enter all amounts as positive numbers. a. State the effect of the error on the December 31, 2014, balance sheet of Hydro White Water. Balance Sheet Items Understated/Overstated Amount Merchandise Inventory Current Assets $ Total Assets Owner's Equity b. State the effect of the error on the income statement of Hydro White Water for the year ended December 31, 2014. Income Statement Items Overstated/Understated Amount Cost of Merchandise Sold $ Gross Profit $ Net Income c. If uncorrected, what would be the effect of the error on the 2015 income statement? Income Statement Items Overstated / Understated Amount Cost of Merchandise Sold Gross Profit Net Income