Politano Co. uses a periodic inventory system. Beginning inventory on January 1 was understated by $31,700, and its ending inventory on December 31 was overstated by $10,800. In addition, a purchase of merchandise costing $4,200 was incorrectly recorded as a $42,000 purchase. None of these errors were discovered until the next year. As a result, taxable income for this year was: Multiple Choice O Understated by $25,600 O Overstated by $25,600 O Overstated by $4,700 O Understated by $15,500