During 2018. WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following material amounts: 2016 2017 understated by overstated by $120,000 150,000 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, 2018, before any adjustments. Explain your answer. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors. 3. What other step(s) would be taken in connection with the correction of the errors