Assume the periodic inventory method is used. If the ending inventory for 2018 is understated (and that is the only mistake made), then: Cost of goods sold for 2018, cost of goods sold for 2019, and retained earnings for 2019, respectively, are: Overstated, understated, overstated Understated, overstated, understated Understated, overstated, correct Overstated, understated, correct