Monty Corporation uses the lower of FIFO cost and net realizable value method on an individual item basis, applying the direct method. The inventory at December 31, 2019, included product AG. Relevant per-unit data for product AG follow:

Estimated selling price		$	66
Cost			59
Replacement cost			69
Estimated selling expense			24
Normal profit			17

There were 1,300 units of product AG on hand at December 31, 2019. Product AG was incorrectly valued at $48 per unit for reporting purposes. All 1,300 units were sold in 2020. Assume that Monty follows ASPE, and answer the following questions.

Was net income for 2019 overstated or understated? By how much? (Ignore income tax aspects.)

Net income for 2019 is overstated/understated by $____ .

Was net income for 2020 overstated or understated? By how much?

Net income for 2020 is overstated/understated by $_____ .

Indicate whether the current ratio, inventory turnover ratio, and debt to total assets ratio would be overstated, understated, or not affected for the years ended December 31, 2019, and December 31, 2020.

		December 31, 2019		December 31, 2020
Current ratio		Not Affected, Overstated, Cannot be Determined, Understated		Understated, Cannot be Determined, Not Affected, Overstated
Inventory turnover ratio		Understated, Overstated, Not Affected, Cannot be Determined		Not Affected, Cannot be Determined, Overstated, Understated
Debt to total assets ratio		Understated, Not Affected, Overstated, Cannot be Determined		Cannot be Determined, Overstated, Not Affected, Understated