During 2016, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following material amounts:

2014	understated by	$	131,000
2015	overstated by		161,000

WMC uses a periodic inventory system and the FIFO cost method.

Required:
1.	Determine the effect of these errors on retained earnings at January 1, 2016, before any adjustments. (Ignore income taxes.)

2.	Prepare a journal entry to correct the errors.