During its first and second years of operations, Ranger Company, a corporation using a periodic inventory system, made undiscovered errors in taking its year-end inventories that overstated year 1 ending inventory by $ 160,000 and overstated year 2 ending inventory by $120,000. The combined effect of these errors on reported income is: Year 1 Year 2 Year 3 Overstated Overstated Understated $160,000 $280,000 $120,000 O Year 1 Year 2 Year 3 Overstated Overstated Not affected $160,000 $120,000 O Year 1 Year 2 Year 3 Understated Understated Not affected $160,000 $280,000 O Year 1 Year 2 Year 3 Overstated Understated Understated $160,000 $40,000 $120,000