10 Problem 20-14 Errors; change in estimate change in principle; restatement of previous financial statements (LO20-1, 20-3, 20-4, 20-6] pints Whaley Distributors is a wholesale istributor of electronic components. Financial statements for the years ended December 31, 2016 and 2017, reported the following amounts and subtotals ($ in millions): Net Income eBook Assets Liabilities $720 $320 800 3 90 2016 2017 Shareholders' Equity $400 410 $200 Expenses $148 173 References In 2018 the following situations occurred or came to light: a. Internal auditors discovered that ending inventories reported on the financial statements the two previous years were misstated due to faulty Internal controls. The errors were in the following amounts: $11.8 million 2016 Inventory 2017 Inventory Overstated by Understated by b. A liability was accrued in 2016 for a probable payment of $6.6 million in connection with a lawsuit ultimately settled in December 2018 for $3.8 million c. A patent costing $16.8 million at the beginning of 2016, expected to benefit operations for a total of six years, has not been amortized since acquired. d. Whaley's conveyer equipment was depreciated by the sum-of-the-years' digits (SYD) basis since it was acquired at the beginning of 2016 at a cost of $270 million. It has an expected useful life of five years and no expected residual value. At the beginning of 2018, Whaley decided to switch to straight-line depreciation. Required: For each situation: 1. Prepare any journal entry necessary as a direct result of the change or error correction as well as any adjusting entry for 2018 related to the situation described. (Ignore tax effects.) 2. Determine the amounts to be reported for each of the five items shown below from the 2016 and 2017 financial statements when those amounts are reported again in the 2016-2018 comparative financial statements. points eBook Complete this question by entering your answers in the tabs below. References Required 1 Required 2 Prepare any journal entry necessary as a direct result of the change or error correction as well as any adjusting entry for 2018 related to the situation described. (Ignore tax effects.) (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Enter your answers in millions rounded to 1 decimal place (.e., 5,500,000 should be entered as 5.5)) Show less View transaction list Journal entry worksheet 2 3 Record entry necessary as a direct result of the change or error correction. 10 Complete this question by entering your answers in the tabs below. Required 1 Required 2 moints Prepare any journal entry necessary as a direct result of the change or error correction as well as any adjusting entry for 2018 related to the situation described. (Ignore tax effects. If no entry is required for a transaction/event, select "No journal entry required in the first account field. Enter your answers in millions rounded to 1 decimal place (.e., 5,500,000 should be entered as 5.5)) Show less Book References View transaction list Journal entry worksheet Record adjusting journal entry if needed for 2018. Note: Enter debits before credits General Journal Debit Credit Transaction a(2) 10 Prepare any journal entry necessary as a direct result of the change or error correction as well as any adjusting entry for 2018 related to the situation described. (Ignore tax effects.) (Ir no entry is required for a transaction/event, select "No journal entry required" in the first account held. Enter your answers in millions rounded to 1 decimal place (le, 5,500,000 should be entered as 5.5)) Show less View transaction list eBook Journal entry worksheet