During 2018, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts: invcenories by th ollowing amout 2016 2017 understated by overstated by $120,000 150,000 WMC uses the periodic inventory system and the FIFO cost method. Required: 1. Determine the effect of these errors on retained earnings at January 1, 2018, before any adjustments. Explain your answer.(Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. What other steps would be taken in connection with the error