During 2021, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following material amounts:

2019	understated by	$	132,000
2020	overstated by		162,000

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, 2021, before any adjustments. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors.

Determine the effect of these errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.)

Prepare a journal entry to correct the errors. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)