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 $120,000 150,000 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. a 3. Will WMC account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Reg 2 Reg 3 Determine the effect of 2019 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes. (If the answers is no effect then select "No effect" in the dropdown.) 2019 Beginning inventory Plus: net purchases Less: ending inventory Cost of goods sold 2020 Beginning inventory Plus: net purchases Less: ending inventory Cost of goods sold 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 Reg 1A Req 1B Req 2 Reg 3 Determine the effect of 2020 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes. (If the answers is no effect then select "No effect" in the dropdown.) 2020 Beginning inventory Plus: net purchases : Less: ending inventory Cost of goods sold Revenues Less: cost of goods sold Less: other expenses : Net income Retained earnings Reg 1A Reg 1B Reg 2 Req3 Prepare a journal entry to correct the error in 2021. (If no entry is required for a transaction/event, select "No journal entry the first account field.) View transaction list View journal entry worksheet No Event General Journal Credit Debit 150,000 1 1 Retained earnings Inventory 150,000 Reg 1A Reg 1B Req 2 Reg 3 Will WMC account for the error (a) retrospectively or (b) prospectively? WMC account for the error Retrospectively