1. Jill Co. uses a periodic inventory system. At the end of the recording period they discovered a $500,000 overstatement of ending inventory. If the error is discovered in the following year, what is the correct journal entry to correct the error? a. Debit Cash $500,000 and credit Inventory $500,000. b. Debit Retained Earnings $500,000 and credit Inventory $500,000. C. Debit Inventory $500,000 and credit Cash $500,000. d. Debit Inventory $500,000 and credit Retained Earnings $500,000. e. No correcting entry required as the error has self corrected. 2. Sidney's Surfboard Company uses a periodic inventory system and discovers a $400,000 understatement of ending inventory for 2020? If the error is discovered in 2021, which of the following would be included in the adjusting journal entry? a. debit to inventory for $400,000 b. credit to inventory for $400,000 c. credit to cost of goods sold for $400,000 d. debit to cost of goods sold for $400,000