During the taking of its physical inventory on August 31, 2016, Kate Interiors Company incorrectly counted its inventory as $366,900 instead of the correct amount of $378,500. Indicate the effect of...

During the taking of its physical inventory on August 31, 2016, Kate Interiors Company incorrectly counted its inventory as $366,900 instead of the correct amount of $378,500. Indicate the effect of the misstatement on Kate Interiors’ August 31, 2016, balance sheet and income statement for the year ended August 31, 2016.