ABC year-end count of inventory revealed an ending balance of $30,000. ABC Corp. uses the periodic inventory system. An error in the physical count caused ABC Corp. to overstate its 12/31/2019 ending inventory by $2,000.

This error would cause 2019 net income and 2020 retained earnings to be:

		overstated and understated, respectively
		understated and overstated, respectively
		understated and understated, respectively
		overstated and correctly stated, respectively