The Ending Merchandise Inventory for the Current Accounting Period Is

The ending Merchandise Inventory for the current accounting period is understated by $2,700.What effect will this error have on Cost of Goods Sold and Net Income for the current accounting period?

A) $$\begin{array} { | l | l | } \hline \text { Cost of Goods Sold } & \text { Net Income } \\ \hline \text { Understated } & \text { Understated } \\\hline\end{array}$$
B) $$\begin{array} { | l | l | } \hline \text { Cost of Goods Sold } & \text { Net Income } \\ \hline \text { Overstated } & \text { Overstated } \\\hline\end{array}$$
C) $$\begin{array} { | l | l | } \hline \text { Cost of Goods Sold } & \text { Net Income } \\\hline \text { Understated } & \text { Overstated } \\\hline\end{array}$$
D) $$\begin{array} { | l | l | } \hline \text { Cost of Goods Sold } & \text { Net Income } \\ \hline \text { Overstated } & \text { Understated } \\\hline\end{array}$$