The accountant for the Ricardo Company made the following errors related to purchases of merchandise and ending inventory in 2007:

1.	A $1,600 purchase of merchandise on credit was not recorded or included in ending inventory.
2.	A $1,250 purchase of merchandise on credit was recorded, but it was inadvertently omitted from the end-of-year physical inventory count.

The Ricardo Company's 2007 net income will be (assume a periodic inventory system):

a.	understated by $1,250
b.	understated by $2,850
c.	overstated by $350
d.	overstated by $1,250