Effect of Inventory Errors During the taking of its physical inventory on August 31, 2019, Kate Interiors Company incorrectly counted its inventory as $366,900 Instead of the correct amount of $378,500. Indicate the effect of the misstatement on Kate Interiors' August 31, 2019, balance sheet and income statement for the year ended August 31, 2019. Also record the amount of each overstatement or understatement. Enter all amounts as positive numbers. Merchandise inventory Balance Sheet Understated Current assets Balance Sheet Understated Total assets Balance Sheet Understated Owner's equity Balance Sheet Understated Cost of merchandise sold Income Statement Overstated Gross profit Income Statement Understated Net Income Income Statement Understated Check My Wors When the ending inventory is understated, consider how this understatement afects both current and total assets on the balance sheet Since cost of merchandise sold is an expense, what is the impact of an overstated expense on gross profit and not income on the income statement and on owner's equity in the balance sheet