During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts: 2019 understated by 2020 overstated by $130,000 170,000 WMC uses the periodic inventory system and the FIFO cost method. Required: 1-a. Determine the effect of 2019 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) 1-b. Determine the effect of 2020 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) 2. Prepare a journal entry to correct the error in 2021. 3. Will WMC account for the error (a) retrospectively or (b) prospectively? No effect 2019 Beginning inventory Plus: net purchases Less: ending inventory Cost of goods sold 2019 effect on 2021 Beginning inventory Plus: net purchases Less: ending inventory Cost of goods sold Understated Revenues Less: cost of goods sold Less: other expenses Net income Revenues Less: cost of goods sold Less: other expenses Net income Retained earnings Retained earnings Req 1A Req 1B Req 2 Req3 Determine the effect of 2020 errors on retained earnings at Janu (If the answers is no effect then select "No effect" in the dropdo 2020 Beginning inventory Plus: net purchases Less: ending inventory Cost of goods sold Understated Overstated No effect Revenues Less: cost of goods sold Less: other expenses Net income Retained earnings Req 1A Req 1B Req 2 Req3 Prepare a journal entry to correct the error in 2021. (If no entry is required for a transaction/ever the first account field.) View transaction list Journal entry worksheet