87. During its first year of operations, Felix Company, using a periodic inventory system, made undiscovered errors in taking its year-end inventory that overstated Year 1 ending inventory by $200,000. The effect of these errors on reported income is: A) Year 1 Year 2 Understated Understated $200,000 $200,000 B) Year 1 Year 2 Overstated Understated $200,000 $200,000 C) Year 1 Year 2 Overstated Not affected $200,000 --- D) Year 1 Year 2 Overstated Overstated $200,000 $200,000