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

2019	Understated by	$156,000
2020	Overstated by	$222,000

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.)

2019		2019 Effect on 2021
Beginning Inventory		Beginning Inventory
Plus: Net Purchases		Plus: Net Purchases
Less: Ending Inventory		Less: Ending Inventory
Cost of Goods Sold		Cost of Goods Sold
Revenue		Revenue
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 2020 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.)

2019
Beginning Inventory
Plus: Net Purchases
Less: Ending Inventory
Cost of Goods Sold
Revenue
Less: Cost of Goods Sold
Less: Other Expenses
Net Income
Retained Earnings

2. Prepare a journal entry to correct the error in 2021. 3. Will WMC account for the error (a) retrospectively or (b) prospectively?