During 2018, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts:

2016	understated by	$	134,000
2017	overstated by		178,000

WMC uses the periodic inventory system and the FIFO cost method. Required: 1-a. Determine the effect of 2016 errors on retained earnings at January 1, 2018, before any adjustments. (Ignore income taxes.)

2016		2016 effect on 2017
Beginning inventory		Beginning inventory
Plus: net purchases		Plus: net purchases
Less: ending inventory		Less: ending inventory
Cost of goods sold		Cost of goods sold
Revenues		Revenues
Less: cost of goods sold		Less: cost of goods sold
Less: other expenses		Less: other expenses
Net income		Net income
Retained earnings		Retained earnings

1-b. Determine the effect of 2017 errors on retained earnings at January 1, 2018, before any adjustments. (Ignore income taxes.)

2017Beginning inventoryPlus: net purchasesLess: ending inventoryCost of goods soldRevenuesLess: cost of goods soldLess: other expensesNet incomeRetained earnings

2. Prepare a journal entry to correct the error made in 2017.