On December 27, 20x1, ABC sold merchandise on account with a selling price of $6,000 to XYZ Company. The terms of the sale were FOB destination. The goods, which had a cost of $4,000, were shipped on December 27, 20X1 and were received by XYZ on January 3, 20X2. ABC uses a periodic inventory system. ABC recorded the sale on December 27, 20X1 and excluded the merchandise from the ending inventory physical count because the goods were not in the warehouse. Determine the effect of this error on the financial statements for ABC for the year ended December 31, 20X1: Total assets are understated by $4,000 Stockholder's Equity is overstated by $2,000 Liabilities are understated by $4,000 Net Income is overstated by $6,000