Illusory Products Co.began operations early in 1999 and reported the following items in its financial statements at the ends of 1999 and 2000 (dollars in millions):

1999 2000 Ending inventory $18 $22 Gross margin 62 75 Retained earnings 54 66 Early in 2001, management discovered that the ending inventory for 1999 was overstated by $7 million, and the ending inventory for 2000 was correctly measured.The company’s income tax rate in both years was 40 percent.

Required Determine the effects,if any,of the overstatement of 1999’s ending inventory on Illusory Products’ gross margin and retained earnings for 1999 and 2000.