Lumen INC. is preparing its 2020 year-end financial statements. Prior to any adjustments, inventory is valued at P76,050, based on a physical count. The following information has been found relating to certain inventory transactions.

3. An invoice for goods costing P 3,500 was received and recorded as a purchase on December 31 , 2020. The related goods, shipped FOB destination, were received on January 2, 2021, and

thus were not included in the physical inventory. Which of the following statements is true?

a. There is no effect on the 2020 ending inventory.

b. There is no effect on the 2020 net income.

c. The 2020 ending inventory is overstated.

d. The 2020 ending inventory is understated.